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Waters, Sen Larissa
Carr, Sen Kim
Williams, Sen John
Ludwig, Sen Joe
Bushby, Sen David
Xenophon, Sen Nick
Mr B Wilson
Colbeck, Sen Richard
Ronaldson, Sen Michael
Mr D Wilson
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Economics Legislation Committee
(Senate-Thursday, 4 June 2015)
Australian Renewable Energy Agency
Mr B Wilson
Mr D Wilson
Senator KIM CARR
- Australian Renewable Energy Agency
- INDUSTRY PORTFOLIO
Content WindowEconomics Legislation Committee - 04/06/2015 - Estimates - INDUSTRY PORTFOLIO - Australian Renewable Energy Agency
Australian Renewable Energy Agency
Senator WATERS: I have some questions for ARENA. Can I start off with the reduction in Renewable Energy Certificates likely to occur under the legislation that passed the House this week. Does that change the viability of any investment decisions in your pipeline?
Mr Frischknecht : Thank you, Senator, for that question. You are referring to the proposed 33,000 gigawatt hour target. We have not done a detailed analysis of the pipeline of projects that are going to fulfil that target, but we do have a small handful of large-scale projects—they are effectively large-scale solar that are near commercial; they are not fully commercial yet—that do rely on large-scale certificates. Whether or not those go ahead depends on whether they get an off-take agreement from a buyer of the energy they produce. Our belief—we do not know, because we are not the commercial party involved, of course—is that the projects that we are currently working with should not be greatly disadvantaged by the target that has been proposed. However, there is a broader issue here, which is that the cost of large-scale solar is currently coming down quite rapidly and should in the not-too-distant future be competitive with wind. That probably will not occur in the time frame that is available between now and 2020 given the 33,000 gigawatt hour target, so that solar can actually compete without a subsidy against wind.
Senator WATERS: Just to make clear that I understand what you have said, large-scale solar would have reached parity with wind faster had the proposal for the gigawatt hours to come down from 41,000 to 33,000 not been passed through the parliament. Is that what you are saying?
Mr Frischknecht : I am not sure that is quite right. If there is a larger target that needs to be met, there need to be more projects going into that target. That allows there to be more demand and that means solar projects that are not yet quite as fully developed or not yet quite as cheap would have had a better chance of getting in. That is true.
Senator WATERS: On concentrated solar thermal, how much do you think could be connected up to the NEM in the next couple of years?
Mr Frischknecht : Concentrated solar thermal is solar thermal energy with storage, presumably—the advantage of solar thermal. Most of the projects that we see are still fairly early stage from a commercial viability perspective, so they are starting to be tested at scale and there are some very good companies in the space. Vast Solar is one that we are working with that has, in the last decade, moved through the various stages from concept through to successful pilot. But that is still quite a way away from being commercially viable. We expect that they are being connected to the grid but for testing purposes as opposed to really contributing much energy.
CHAIR: Senator Waters, you are just bordering on the hypotheticals a little bit. I am just making you aware.
Senator WATERS: Thank you. Does ARENA have a program, or have you considered a program, to have demonstration scale concentrated solar thermal plants connected to the NEM?
Mr Frischknecht : Yes, we actually do have a number of projects in the pipeline to do exactly that.
Senator WATERS: Perhaps on notice, given the time, could you provide me with as much detail as you can about those plans and projects and their time frames and any effective recent policy decisions on your ability to continue that work. That would be great. Moving now to funding issues, are you having to use any of your investment funds to cover operational expenses, or are you getting a separate provision from government for operational expenses?
Mr Frischknecht : Under the ARENA Act the department is required to make staff available to ARENA for our operations, and in fact the department does do that. We effectively have a division from the Department of Industry and Science that works on ARENA. In addition, we have the ability and indeed the requirement to appoint specialists for very specialised work, and that comes out of the ARENA project funding bucket, if you like. Yes, we do appoint such people where necessary.
Senator WATERS: Again, if you could take on notice for me the quantum of that. I am also interested in how the loss of the $717 million from your funding due to the repeal of the carbon price has affected your operations and your investments.
Mr Frischknecht : Just to clarify, there was a reduction of $435 million and then there was a profiling of $370 into the out years. The effect of those reductions was to reduce funding quite dramatically for two years—in fact, next year and the following year. Because of the rollover provision in our act, which allows unspent funding from prior years to roll over to future years, it actually has not had very much of an impact in terms of the projects that we can do.
Senator WATERS: I am pleased to hear about that provision, then. How much private sector investment have you created in total, and how much are you expecting to create from the projects that you have in the pipeline?
Mr Frischknecht : We have about $1 billion worth of ARENA commitments, and for every dollar that we commit typically there is about $2 of third party financing. So there is a total of about $3 billion of economic activity that is direct.
Senator WATERS: Before the repeal bill, I think 70-odd per cent of your investments were going into the regions. Has that profile changed at all and, if so, how?
Mr Frischknecht : That is roughly right: about 70 per cent of our funding goes into rural and remote areas, which is in fact where the projects take place.
Senator WATERS: Can you tell me about the most exciting, cutting edge technology that you are looking at at the minute, given that is your role?
Mr Frischknecht : There are many; it is hard to choose. One thing that is very exciting is that Australia really has a leadership position in working on PV R&D. A majority of the panels that we see on rooftops either have now or will in the very near future be based on UNSW and ANU intellectual property. That is a gigantic gift that we have given to the world and, of course, benefited from ourselves directly in the form of cheaper panels. It has also resulted in lots of foreign students coming here, which of course is an export; substantial intellectual property licence fees; and also contract R&D. A lot of the Chinese solar manufacturers do contract R&D here.
That is the past. The future is equally exciting in that we can see the cost declines in PV continuing quite dramatically, and that is going to lead to large-scale projects being competitive with wind soon, and both of them being very competitive with any fossil fuel new build in the near future, if they are not already.
Senator WATERS: When you say 'the future', can you be a little more specific in your estimation.
Mr Frischknecht : Our view is that building a new wind farm today is cheaper than building a new coal fired power station. Of course, the comparison that takes place in reality is between a very old coal fire station that has been fully paid off and a new wind or solar farm. That is not quite a fair comparison, but under that scenario the fossil fuel is cheaper. But, if you had to build new capacity, it turns out that the renewables are already cheaper today. The critical part, of course, is that when you get to high levels of renewable penetration you need to figure out how to make the power firm, to have it always be available; some people call that baseload. Storage is now advancing very rapidly, so there is a potential solution for that as well.
Senator WATERS: That is exciting. In relation to a project that I understand you have undertaken with Rio Tinto to provide solar power for the bauxite mine at Weipa; what is the cost differential between the solar and diesel generation?
Mr Frischknecht : I will ask my CFO if he has those numbers to hand, but roughly speaking I will give you a sense. In the off-grid areas, diesel generation and renewable generation are approximately equal. They are very site specific in both cases, because the cost of transportation of the diesel is site specific and the cost of building a solar power plant is also very much site specific. The other factor that is important here is project length. Because renewables tend to be very capital-intensive up-front, whereas fossil fuels, especially diesel, have very high ongoing operating costs, for a longer project—and typically 10 years plus—renewables tend to be cheaper; for shorter projects, less than 10 years, the diesel tends to be cheaper. Of course, you are always going to want both, because it does not pay, at least not today, to have a very large amount of storage to make up for the fact that renewables are not always there. So you tend to have solar plus diesel, or solar plus wind plus diesel.
Senator WATERS: One very final question, if I may, Chair. Is there anything that ARENA is looking at or investing in to limit fugitive emissions by coal and particularly gas mining?
Mr Frischknecht : That currently is not in our mandate. It is limited to renewable energy and associated technologies.
Senator WATERS: And there is no relevant technologies that could address that issue?
Mr Frischknecht : We have not come across any.
Senator WATERS: Not that have crossed your desk. If I can go with one more, Chair?
CHAIR: No, that would not be good rule.
Senator WATERS: I thought I could try!
CHAIR: Does anybody have anything else for resources and energy? Go ahead, Ms Beauchamp.
Ms Beauchamp : There are a couple of follow-up questions in response to Senator Ketter about mineral exploration expenditure. That is one of them.
CHAIR: You have some answers?
Ms Weston : We have a question here on graduate numbers. Graduate numbers for last year were 38 and for this year are 34. We expect that for the year coming they will be in that same vicinity, but we are in the process at the moment.
CHAIR: Any other answers?
Mr Medland : There was one question around the four-year period for the National Low Emissions Coal Initiative. That reference is in Budget Paper No. 2, page 169. The four-year period refers to the period 2013-14 to 2016-17. That is $96.6 million, and it is consistent with the current year. Effectively 2013-14 has dropped off, so the equivalent would be over a three-year period with a lesser amount.
CHAIR: Mr Wilson?
Mr B Wilson : The senator had asked about recent trends in exploration expenditure. I can report that total expenditure on exploration was down 22 per cent to $318 million in the March quarter. Greenfield expenditure was down 25 per cent to a total of $91 million, and brownfield expenditure fell 21 per cent to $227 million. Falls were seen in all jurisdictions. There were some encouraging trends though in individual commodities, with uranium, nickel cobalt and gold showing uptake in exploration expenditure. Some commodities, such as iron ore and coal, continued to show decreases in expenditure. The relative size of those commodities drove the overall numbers, but there certainly were some encouraging signs in an overall picture of the continued fall in expenditure. I am unable to indicate at all whether there is any link between that and the Exploration Development Incentive.
CHAIR: Thank you very much, Mr Wilson. That finishes program 2. We will go to program 3 after the break with the department of industry.
Proceedings suspended from 10 : 33 to 10 : 45
Senator KIM CARR: The issue of aluminium cladding has received a fair bit of media attention. This is a matter that goes to the Building Ministers' Forum, which the Minister for Industry chairs.
Ms Beauchamp : I thought we were doing program 3 first—
Senator KIM CARR: This is a cross-portfolio matter. There are a number of matters I wish to deal with here in the cross-portfolio area. This is on the Building Ministers' Forum. You would be aware, I take it, of the events around the Lacrosse Docklands apartment building in Latrobe St in Melbourne that caught fire back on 20 November last year. Are departmental officers across that matter?
Mr Chesworth : It is an issue that is on our radar, most certainly; both ourselves and the Australian Building Codes Board.
Senator KIM CARR: That is right, it is a question that goes to the Australian industry building codes. My concern here is that there has been various reports from state officials, from unions, from community organisations, that have indicated that the products that were used on the building did not conform to the Australian safety standards. I want to know what action the government is taking to address the issue.
Mr Chesworth : There is a range of actions. The first thing is that I understand it is expected to be on the agenda for the Building Ministers' Forum in early July. The second thing is that, again having read reports in the media that the Victorian government has undertaken an audit of around about 170 building companies to assess whether they have proper management processes in place, to ensure that product is used for the purpose for which it was designed. That takes me to what could be regarded as the core issue, which is the difference between product that comes into this country, which may be for a particular purpose from whatever country, and the purpose to which it is put. From the reports I have read, the product in question was intended for use in buildings three or four stories high. It was used in a building that was much higher, and the Victorian government is rightly looking at that issue carefully.
Senator KIM CARR: The problem is that the Minister for Planning and various regulatory authorities in Victoria have sent out over 2,000 items of correspondence. The point is that over 2,000 items of correspondence have been sent out to builders across Australia not just in Victoria, so it is not just a matter of just Victoria. It is suggested that the state regulatory authorities do not have the powers to inquire into these matters, that they are relying upon builders actually advising them as to what they are undertaking. Further, I have raised this matter with Customs officers, who say that the cladding is not on the prescribed product list, and that it requires action from the department of industry to actually start the process of having the matter declared a prescribed product. That is why I am asking the question about what steps the Commonwealth is taking to ensure Australian building safety standards are actually upheld. Apart from putting it on a meeting agenda, what other action are you taking?
Mr Chesworth : It comes as much to it being an issue that spans many levels of government. There are particular activities that the Australian Building Codes Board does, particularly in relation to the National Construction Code. Customs, I would assume, whilst there may be products that are proscribed, would themselves probably take a risk-based approach to looking at the products that are actually coming in, and the state governments have a role in licensing building companies and ensuring a more coal-face level of compliance. So, when I say that it is on the agenda of the Building Ministers Forum, that is as much about saying that it is an issue where all jurisdictions perhaps have to work together and that there is certainly some work to be done.
Senator KIM CARR: There is certainly some work to be done all right. Let us just look at some of the specifics. The Victorians have undertaken an audit of 170 buildings—
Mr Chesworth : That is my understanding.
Senator KIM CARR: Is the Commonwealth proposing to seek audits across Australia?
Mr Chesworth : The answer is no, and I am not aware that we would have the power to do that.
Senator KIM CARR: You would have the power, through the Building Ministers Forum, to raise the issue. The Commonwealth has the capacity to initiate actions. It may well be that it requires states to follow through, but on a coordinated basis. That is the point of the Building Ministers Forum: to get a coordinated response, particularly on the issue of standards, is it not?
Ms Beauchamp : Can I just confirm that there is a Building Ministers Forum in July. Parliamentary Secretary Andrews has written to state and territory counterparts twice about the use of nonconforming products and how important this issue is to address through the Building Ministers Forum, and so it is a matter that is on the agenda, but I am just confirming what Mr Chesworth said: these are regulatory issues for the states and territories, and of course the Commonwealth has seen this as an important issue and therefore it is on the Building Ministers Forum. So it will be addressed in July.
Senator KIM CARR: Is there a national building code?
Mr Chesworth : Yes.
Senator KIM CARR: Has that been breached?
Mr Chesworth : I do not think it has.
Senator KIM CARR: This product is clearly in breach of the national builders code.
Ms Beauchamp : I think Mr Chesworth said earlier that the evidence suggests that it was not a case of the product but of incorrect use of the product. So, for example, in layperson's terms, from my point of view, it seems like that product is absolutely legitimate for use for buildings of one and two storeys; for buildings higher than one or two storeys, the building practitioners should have used other products.
CHAIR: They put it in the wrong spot.
Senator KIM CARR: Well, that is the claim. The CSIRO has undertaken studies of the flammability of the product, and what have they discovered, Mr Chesworth?
Mr Chesworth : That it was indeed very flammable.
Senator KIM CARR: Indeed—in fact, so flammable that they had to stop the tests because it was damaging their equipment. This stuff is dangerous. I am asking you again: is this in breach of the national building code?
Mr Chesworth : Again, it comes down to the issue of the purpose to which the goods are put.
Senator WILLIAMS: In this case, first storey buildings, was it a breach?
Mr Chesworth : I am not the regulator and I cannot—
Senator KIM CARR: But it has been used for multistorey buildings. We have established that. We have established that the Victorian fire brigade regards the stuff as being highly dangerous. We have established that the CSIRO regards it as highly flammable and had to stop the tests. This is a matter that has, of course, been going on for some time and, Madam Secretary, since you mention the parliamentary secretary, was it the case that the parliamentary secretary recently received correspondence from the CFMEU on this issue?
Ms Beauchamp : I would have to take that on notice.
Senator KIM CARR: It called for urgent orders across Australia, as a matter of public safety.
Dr Byrne : I can confirm that we have received correspondence from the CFMEU, and, indeed, other parties, in relation to these matters. Just to add to other comments that have been made: obviously we are aware of the sensitivities of the matter and the need for the Commonwealth to work with the states and territories in relation to potential strategies to address some of the outstanding issues. At the forthcoming building ministers forum issues relating to non-conforming and non-complying building products will be a key issue.
Senator KIM CARR: Has the department formulated a response to the union's letter?
Dr Byrne : The response in a sense is a process response initially. The responsibility for these matters is primarily, as you would know, with the states and territories. Part of the reason for the dialog at the building ministers forum is to invite states and territories to explore the actions that they might take to remedy issues for their jurisdictions, and also to perhaps look at additional national strategies that could be applied. But the reason the department has not foreshadowed a strategy, if you like, is that it needs to be developed in the collaborative process through the building ministers forum.
Senator KIM CARR: This matter was raised at the Prime Minister's Taskforce on Manufacturing, back in 2012: 50 people died in a fire in Shanghai as a result, as I understand it, of this material catching fire. A number of recommendations were made back in August 2012, including:
Australian manufacturers are increasingly finding that they are competing against products that do not conform to regulatory requirements and do not meet standards to which domestic businesses adhere.
This places complying and conforming businesses at a cost and competitive disadvantage. The report went on to recommend that the Commonwealth government:
1. Develop an approach to conformity marking along the lines of Europe’s CE Marking.
2. Evaluate, in consultation with industry, the effectiveness of existing regulators with responsibilities for product assessment with a view to improving effectiveness of conformity assessment.
3. Enter a dialogue with the ACCC and, through the State and Territory Governments, Offices of Fair Trading, to increase the priority given to addressing misleading claims of conformity with regulation and voluntary standards.
What progress has been made on the implementation of the recommendations of the Prime Minister's Taskforce on Manufacturing?
Dr Byrne : I will make a few observations. Obviously, there is a range of players who are involved in actually resolving these issues—not just the states and territories, but the builders themselves, industry groups and so forth. One of the actions that have occurred is that the Australian Industry Group has developed a construction product alliance that involves a lot of key stakeholders, which is attempting, from an industry lens, to look at action that could be taken. Certainly, the department has entered into and continues discussions with the ACCC and with other parties in relation to what action could be taken. But as you would appreciate, in terms of the role of the ACCC, in most instances the matters that need to be addressed are actually for the fair-trading state bodies rather than the ACCC, but the ACCC and the department continue to have a dialogue. Through our previous parliamentary secretary, late last year there was an opportunity for stakeholders to meet with the Commonwealth to talk about issues from their perspective, through a non-confirming building products round table. Obviously, representations to government continue from industry stakeholders. Also, at the forthcoming BMF there will be a further discussion about these important matters and what further action may need to be taken, either at the jurisdictional level or at the national level.
Senator KIM CARR: It seems to me that what you are doing here is getting the mirror out and having a good look into it. There is not much action being proposed here.
CHAIR: Senator Carr, you are just verballing Dr Byrne. Just ask your question.
Senator KIM CARR: Customs and Border Protection officers advised me last week that there is a list of prohibited products, such as asbestos. That is a prescription through the Customs (Prohibited Imports) Regulation, which is a Commonwealth declaration made under the Customs Act. What is the process for getting a product put onto that list?
Dr Byrne : That would be a matter better directed to Customs, because there is a difference between building products that are found to contain restricted or prohibited items, such as asbestos, and the broader issue of non-conforming building products. Different departments have different responsibilities, depending on—
Senator KIM CARR: I am not surprised that you would say that, because I was informed by the Customs officials that it was the responsibility of the Department of Industry and Science to investigate whether an import control should be put on a product. Are you investigating this option?
Senator Colbeck: That might also depend on what use the product is going to be put to under the codes. As I understand it, this product is suitable for use on certain building types. So, in that context, it would not be appropriate to have a Customs control put on it. It is a matter of the flammability index of the particular building material. I think that is all understood, and the concerns around that that are being expressed are very legitimate. But if it is an approved material for certain uses, then that would not give a reason to put a control around it for importation purposes. There are different materials with different flammability indexes that are approved or not approved throughout the building codes for various uses.
Senator KIM CARR: That is all true. To establish that you would have to investigate the product. Has the investigation of this product begun?
Senator Colbeck: As I understand it, the product does have approval for use in certain circumstances, and it is recognised as being suitable for use in certain circumstances.
Dr Byrne : If I could just add, I think there is a conflation of issues here. The product that is being referred to in the Docklands apartment building fire is fit for purpose in certain circumstances. So it is not that it is not conforming; it is that it is not compliant for the purpose for which it needs to be put. In that case the process is that the Victorians are currently undertaking an investigation. Also, Australian Building Codes Board—I am not sure if I have a colleague from the board here—is proposing to undertake some project work in relation to clarifying any implications for the National Construction Code, arising from the fire.
Senator KIM CARR: I look forward to speaking to them is there is someone here. But what communications has the Department of Industry and Science had with the Department of Customs and Border Protection?
Dr Byrne : There have been officials communicating with colleagues in the different departments. Through our parliamentary secretary we have also engaged directly, at ministerial and parliamentary secretary level, in relation to how, in preparation for the building ministers forum, we might properly conclude some areas of synergies across the Commonwealth in relation to how to handle these matters.
Senator KIM CARR: Can you point out to me exactly what communication has occurred with Customs and Border Protection?
Dr Byrne : I can only comment on my own dialogue. I cannot comment on others. We have got official correspondence from our parliamentary secretary in preparation for the building ministers forum, and we have commenced discussions with the ACCC and Customs—
Senator KIM CARR: With all respect, that is not the question I asked you. What communication has the Department of Industry and Science had with Customs and Border Protection on this issue?
Dr Byrne : There is no official correspondence that I am aware of—
Senator KIM CARR: Do we have someone from the Australian Building Codes Board here?
Dr Byrne : But we have had dialogue.
Ms Beauchamp : They are on their way. They thought this area would be covered after lunch. My apologies.
Senator KIM CARR: Which state jurisdictions have you had communications with on this issue?
Dr Byrne : In relation to the Docklands incident, the Victorian minister, who will be coming to the building ministers forum, has asked—
Senator KIM CARR: Which minister is that?
Dr Byrne : I do not have—
Senator KIM CARR: Mr Wynne, the Minister for Planning?
Dr Byrne : I would need that to give you the correct advice. But he has formally requested that this matter be brought onto the agenda for the building ministers forum.
Senator KIM CARR: Is he the one who put it on the agenda?
Dr Byrne : In terms of the process, through Mrs Andrews we have provided a draft agenda to the jurisdictions in preparation for the building ministers forum, on the 31st.
Senator KIM CARR: So it was already on the agenda?
Dr Byrne : No; I am coming to that. At the time we sent out that agenda, we had a broad agenda item, 'Non-conforming building products', with a range of issues underneath. Through our parliamentary secretary, ministerial colleagues in the jurisdictions were invited to provide suggestions for additions. This incident at the Docklands has occurred fairly recently and the Victorian—
Senator KIM CARR: That is not quite right. It has not happened quite recently.
Dr Byrne : In the scheme of our time lines around preparing for meetings, it is a fairly—
Senator KIM CARR: At the pace at which the Commonwealth moves on these issues, it is fairly recent—is that is what you are referring to?
Dr Byrne : No, not at all.
Senator KIM CARR: When was the fire?
Mr Chesworth : It was at the end of 2014.
Dr Byrne : And the report was brought down—
Senator KIM CARR: When was it raised with the Prime Minister's manufacturing council?
Dr Byrne : No, this happened after—
Senator KIM CARR: I am making the point to you that this is an issue that has been on the Commonwealth agenda for a number of years. It is not just a question arising recently; the newspaper articles might have arisen recently, but the substance of the question goes much deeper than that.
Dr Byrne : Non-conforming building products, we absolutely agree, have continued to be a policy issue for many years, including through the previous Prime Minister's manufacturing task force. However, the Docklands issue is specific to a not fit-for-purpose product being used, and it is in that instance that the Victorian minister asked for it to be added, in addition to non-conforming building products. So we have, basically, non-conforming building products and non-compliant building products now as items for the BMF. I think Mr Chesworth wanted to add to that or perhaps amend.
Mr Chesworth : No.
Senator KIM CARR: So the department was clearly aware that this product had caused the death of 50 people in 2012.
Dr Byrne : I am not aware of that report.
Senator KIM CARR: It was on the Prime Minister's manufacturing task force in 2012, which this department acted as secretary for.
CHAIR: We are going around and around. I think the word 'confluence' was used. You have made your point about the China 2012 incident. You have had an answer on that. There is an issue with the product coming into the country to be used for a purpose. It is approved for purpose. Customs approved it; the industry—
Senator KIM CARR: No, Customs did not approve it.
Dr Byrne : It is compliant with the national construction code.
CHAIR: It comes through.
Senator Colbeck: If a product is compliant for use in Australia for certain purposes, there would be no reason for Customs to stop it at the border. So the discussion around the circumstances in relation to Customs really is quite a moot point because the product is approved for certain uses. If there is going to be a conversation about whether it continues to be approved for those uses, that becomes a different matter, but the circumstance that we have particularly with this fire in Victoria is that it was not compliant for use for that purpose—it was not fit for use—and that quite obviously is an issue. There are a number of regulatory frameworks under which that should be managed. In the process of a Commonwealth conversation around it, I think you indicated it was first raised through the Prime Minister's task force. It might be interesting to get a handle on the time lines of other conversations subsequent to that, both under the previous government and under this one. That might be informative of activity level. We have a circumstance where an event occurred and there is an obvious and relative reaction to it. As the officials have quite clearly said, it is on the agenda for a meeting next month.
Senator KIM CARR: The question comes back to how you get a product on the prohibited imports list, and that requires this department, at the Commonwealth level, to take action. That is why I am raising the matter. A deliberative action has to be taken in this department.
Ms Beauchamp : I do not think it is just our department alone. Obviously these things come through fair trading departments from states and territories and the ACCC for products that may not meet consumer safety requirements and the like. I think, as has been said previously, the previous parl sec held a roundtable on this issue. The parliamentary secretary has written out to her counterparts in the states and territories. I think there is a commitment to look at how this might be addressed in a more whole of government way, and indeed with the states and territories as to what they need to do to address nonconforming products.
Senator KIM CARR: I take it that it has not gone to COAG at all?
Mr Chesworth : Not that I am aware of.
Ms Beauchamp : This has not gone to COAG. The Building Ministers' Forum—
Senator KIM CARR: That is the only intergovernment agency to raise this matter in?
Mr Chesworth : That is correct.
Senator KIM CARR: You have not raised it as such?
Ms Beauchamp : The Building Ministers' Forum involves states and territories. It does not sit under the COAG framework.
Senator KIM CARR: I understand that. Have you raised it through any other interstate body?
Ms Beauchamp : I would have to take that on notice. I am not aware it has been raised through the ACCC and fair trading departments and the like.
Senator LUDWIG: Did the industry minister refer it to the building forum that you just discussed.
Ms Beauchamp : The Building Ministers' Forum is chaired by the Commonwealth. Yes it will be raised and addressed on 31 July.
Senator LUDWIG: It will be raised? How will be raised?
Ms Beauchamp : There has been a fair bit of work in the lead up to that. As I mentioned earlier, the previous parliamentary secretary has had roundtables with industry, and states and territories. The current parliamentary secretary Andrews has written to the states and territories wanting more detail from them and submissions and the like are to come forward . This issue, along with any other potential nonconforming products, will be addressed.
Senator LUDWIG: What is the proposal that the federal minister will take to the meeting? Is there a proposal?
Ms Beauchamp : I think it has been put on the agenda—
Dr Byrne : It is on the agenda but the decision about what outcome would arise from the discussion is a matter of the dialogue between the Commonwealth—
Senator LUDWIG: I am not asking the outcome, I am just asking what proposal has been brought forward. What is the federal minister proposing to do?
Dr Byrne : Because the responsibility for the regulation of nonconforming building products is a matter for states and territories, the dialogue that needs to occur is about the actions that the states and territories intend to take in relation to addressing matters that have been confirmed with evidence as being issues that are indeed nonconforming building products, rather than issues to do with noncompliance or not fit the purpose.
Senator KIM CARR: That is not entirely right, is it? Who sets standards in Australia?
Dr Byrne : The standards setting body—we need our colleagues here from the Australian Building Codes Board—for building is the Australian Building Codes Board but the regulation and legislation is through the states and territories.
Senator KIM CARR: Is it Australian Building Codes Board a Commonwealth body?
Dr Byrne : No. It is a COAG body.
Senator Colbeck: The standards that are called up in that code are set through Standards Australia, which is a different process again.
Senator KIM CARR: Who owns Standards Australia? The issue of standard setting I appreciate is complex, but to suggest that it is just a state responsibility I think sounds very much like buck-passing.
Senator Colbeck: We are not suggesting that at all. What we are talking about is the regulatory frameworks under which the building code is administered and the compliance of that is a state responsibly.
Senator KIM CARR: I said to you there are two questions.
Senator Colbeck: There are also other responsibilities in that supply chain, including specifiers and those administering particularly projects. There is not one single source of responsibility in this process and that is one of the challenges as part of this process. We set overarching standards in cooperation with the states, as we do in a number of other areas, but the enforcement of those standards does not necessarily rest with the Commonwealth.
Senator KIM CARR: It is a combination of responsibilities. I am the saying that it is incorrect to suggest that it is a state responsibility here. You could argue it is a joint responsibility, but it is not the case that it is just the states responsibility.
Senator Colbeck: I do not think that anybody is trying to say that. There are different responsibilities that lie in different places and they ought rest where they responsibly lie—so the enforcement of those code and the oversight of those codes does lie with the states. The preparation, the negotiation and the setting of those standards is a joint responsibility—you are correct. But the actual enforcement of compliance is not something that lies with the Commonwealth.
Senator KIM CARR: That is not entirely true either.
Dr Byrne : Maybe just to answer your question about standards, the National Construction Code, as you know, does reference standards and the international relevant Australian and other standards—
Senator KIM CARR: That is right.
Dr Byrne : but I understand that perhaps we are not explaining this well enough to you, or perhaps you do not agree. The National Construction code is a given legal effect by the relevant legislation in the states and territories. They call up the NCC and they determine whether they adopt it or not. In some instances, as you know, the states and territories do not adopt the NCC requirements in the form that they are provided through the National Construction Code. They make decisions themselves through their legislation as to what they will and will not do.
Senator Colbeck: In fact, there are variations at various state levels to the National Building Code.
Dr Byrne : There are variations. They can be called state-territory variations, which is again another issue that will be explored further.
Senator KIM CARR: Does that affect this question?
Dr Byrne : I think what we are trying to explain is that we are not trying to shirk our responsibilities. The Commonwealth is the collaborative partner in the NCC development process. What we are saying though is that the enforcement of regulation in relation to building is a matter for states and territories.
Senator KIM CARR: We are going around in circles. I agree with the chairman in that round. You did say that the previous parliamentary secretary had a roundtable on this issue. When was that?
Dr Byrne : He had the roundtable on 26 November, 2014. It was with a range of industry stakeholders to look at the issue of nonconforming building products in response to industry concerns about these matters.
Senator KIM CARR: I see. So the issue of this fire, was that considered at that roundtable?
Dr Byrne : No; because it was nonconforming building products, the process was that industry stakeholders were invited to offer comment on the issues as they saw them. It was not a directed agenda in that sense; it was more of a dialogue. It was really an opportunity for industry to give examples of concerns and also share their thoughts about possible actions that could be taken to address those concerns.
Senator KIM CARR: I could be mistaken for thinking that you had been working on this particular fire through this roundtable, and clearly you are not.
Dr Byrne : The roundtable did not discuss the apartment fire issue specifically.
Senator KIM CARR: Why isn't the minister dealing with this matter? Why has it been delegated to a parliamentary secretary?
Senator Colbeck: Are you saying that the parliamentary secretary is not capable of dealing with it?
Senator KIM CARR: No, I am not. I used to chair the Building Ministers' Forum. I want to know why it is that this has been allocated to the parliamentary secretary.
Senator Colbeck: How many meetings did you have after 2012 when the Prime Minister's council raised it.
Senator KIM CARR: I was not the minister. I thought you might be able to answer the question.
Senator Colbeck: My information is that there were no meetings between 2010 and 2013.
Senator KIM CARR: I was not the minister. I actually chaired these meetings and took them very seriously. I would like to know—
Senator Colbeck: Senator, I am the parliamentary secretary too and I take my responsibilities seriously—
CHAIR: Senator Carr, look I know that this is—
Senator Colbeck: and an attempt to downplay the responsibility or how seriously a parliamentary secretary might take the responsibility is a bit cheap.
CHAIR: I want the minister representing the minister, and, you, Senator Carr. to get to the bottom of your issues, but having a competition about who knows more about what should go on is not helpful. It is an important issue and it is a very serious issue. We are doing circle work and I would ask you to either move on or to—
Senator KIM CARR: I am nearly done, but I am still waiting for the officer to appear. Is she on her way?
Ms Weston : We have not been able to find out exactly when they are arriving.
Senator KIM CARR: Has the department given any consideration to the Commonwealth's liability in the event of a death from the use of this product or any noncompliant product if it is demonstrated that the Commonwealth has not taken appropriate action?
Ms Beauchamp : I think that is hypothetical and speculation and we are not in a position to answer that.
Senator KIM CARR: Have you given any consideration to the Commonwealth's legal liabilities with regard to the adverse consequences of the use of a noncompliant product?
Ms Beauchamp : I think we have indicated that this is a very complex issue and primarily one, in terms of regulatory arrangements, for the states. The roundtable that Ms Byrne referred to sort submissions from industry participants and others in terms of how to address nonconforming products. I think the Building Minister's Forum is looking at a forum to bring some of these issues together about raising awareness, enforcing existing regulations and improving delivery of existing accreditation schemes.
So I think what the parliamentary secretary is trying to do is get the key people in the room—decision makers at the state and territory level—and see how this might be better addressed.
Senator KIM CARR: Madam Secretary, have you sought any legal advice on this question of Commonwealth liability?
Ms Beauchamp : No.
Senator KIM CARR: The Australian Industry Group stated in October last year about the Australia-China Free Trade Agreement:
Conformity with Australian safety and quality standards needs to be strengthened and a process developed for legal enforcement of insurance claims and contract breaches.
The AIG submission to DFAT with regard to the FTA also noted:
… many manufactured goods imported from China do not meet Australian safety and quality regulations and standards and the removal of tariffs under an Australia-China FTA may exacerbate this situation.
Is the department aware of those submissions with regard to the questions of standards and the Chinese imports?
Ms Beauchamp : We are aware of the Australian Industry Group representations. Part of the roundtable discussions that Parl. Sec. Baldwin held did involve the Australian Industry Group and their reps.
Senator KIM CARR: What action has actually been taken to address the concerns that AIG have raised?
Ms Beauchamp : I think I have already mentioned and a number of us have said that the issue of nonconforming building products has been discussed by the previous Parliamentary Secretary at a roundtable with key industry participants, and Parl. Sec. Andrews has also written to state and territory ministers putting this issue on the agenda for the building ministers forum in July.
Senator KIM CARR: We will wait for the other officer to arrive and I will come back to this matter. Did any public servants assist or work at budget night functions at Parliament House—departmental officials?
Ms Beauchamp : What do you mean by 'assist'?
Senator KIM CARR: Did they attend, other than—
Ms Beauchamp : Budget night functions?
Senator KIM CARR: Yes, budget night functions.
Ms Beauchamp : We would have been available to answer questions in terms—
Senator KIM CARR: Was this in the lock-up?
Ms Beauchamp : I am not sure whether we had anyone in the lock-up.
Ms Weston : We did have officers in the lock-up, yes, Senator.
Senator KIM CARR: Only in the lock-up?
Ms Beauchamp : To answer questions?
Senator KIM CARR: It was only in the lock-up that you had—
Ms Graham : We had people in the lock-up.
Senator KIM CARR: Did any departmental officers attend any Liberal or National or any Western Australian National or Liberal Party fundraisers—any political functions?
Ms Beauchamp : Not that I am aware of. I would have to take that on notice.
Senator KIM CARR: Please do. That would include DLOs?
Ms Beauchamp : Indeed.
Senator KIM CARR: Thank you.
CHAIR: Are you suggesting they paid to go?
Senator KIM CARR: I am asking a question here. I am asking a number of departments. There have been reports that there were fundraisers on budget night for the government political parties, and I want to know whether any officials helped with any fundraising activities.
Ms Beauchamp : Are you asking whether they were representing the department in a departmental capacity?
Senator KIM CARR: I presume they were not representing the department. That would be an entirely different set of questions. I want to know whether any departmental officers attended any fundraising events and, if so, in what capacity.
Ms Beauchamp : I am not aware of—I would have to take that on notice.
Senator KIM CARR: Take it on notice, thank you—and, if that is the case, any correspondence or request from any ministerial office.
Ms Beauchamp : Can I confirm exactly the second part of that question about correspondence?
Senator KIM CARR: The question is: did they attend any political functions or any fundraising functions associated with budget night? I have excluded the lock-up, which is a straight departmental role. I am asking whether they attended any other—fundraisers, for instance, dinners or—
Ms Beauchamp : I am absolutely not aware of that, and I am sure officers would be aware if that happened.
CHAIR: You have taken it on notice.
Ms Beauchamp : I will take it on notice, but I just want to confirm the second part of your question, about correspondence.
Senator KIM CARR: Yes—if there was any correspondence or any requests from the minister's office for people to attend.
Ms Beauchamp : Any requests from the minister's office for departmental officers to attend fundraising functions? Is that what you are asking?
Senator KIM CARR: No; I have said 'any political functions'. I have included fundraising as a political function.
Ms Beauchamp : But whether the minister's office requested?
Senator KIM CARR: Yes.
Ms Beauchamp : Okay. I will take that on notice, but not that I am aware of.
Senator KIM CARR: I trust the answer will be no and it will not be too difficult to respond to. What is the status of the enterprise bargaining with the department of industry?
Ms Beauchamp : We did have a vote on an enterprise agreement that was put to staff a couple of weeks ago.
Senator KIM CARR: What was the result of the ballot?
Ms Beauchamp : It was voted down.
Senator KIM CARR: What was the vote? Do you know the vote?
Ms Beauchamp : Yes, I do know the vote. Twenty-three per cent voted in favour of the agreement and 77 per cent voted against the proposed agreement.
Senator KIM CARR: So what happens now?
Ms Beauchamp : We had been working with staff probably since early 2014 to understand exactly what sorts of issues they wanted covered in the enterprise agreement, and we had thought we put a fair and reasonable response forward, addressing their concerns. So we will be going back to staff and doing a staff survey in terms of what was missing, what gaps there were and exactly why it was voted down.
Senator KIM CARR: You do not know why it was voted down?
Ms Beauchamp : Not unless I do the survey, no.
Senator KIM CARR: What is different is in this round from the previous bargaining round?
Ms Beauchamp : This round has probably taken a little longer to negotiate. We have a very clear enterprise bargaining framework, set by government, within which to work. My experience in dealing with negotiations of enterprise agreements is that it is always a process of engagement over a long period of time.
Senator KIM CARR: How does the offer that you put to staff differ from the previous innovation department agreement?
Ms Beauchamp : I think that would not be a fair comparison, given that, with this agreement, in a sense, one of the key aspects that staff wanted to be addressed was salary disparity. The reason I have raised salary disparity is that we have had 16 different functions moved in and out of what is now the department since 2011, so there were a range of very different enterprise agreements operating, and bringing them all together and addressing what we thought the priorities of staff were, about salary disparity, has probably been one of the big differences.
Senator KIM CARR: It is a pretty substantial vote, isn't it—77 per cent rejection? That is quite a significant number, isn't it? You would have to concede that the offer fell way short of what people expected.
Ms Beauchamp : It was a little bit of a surprise to me, I must say, but every staff member has a democratic right to vote. What I would like to do now is work further with staff to better understand why it was voted down.
Senator KIM CARR: Do you think it has had an impact on morale?
Ms Beauchamp : I think, when you look at our APS staff survey results, you look at our drop in absenteeism and you look at other things that impact on staff morale, we have got a very positive department. We have got a great learning and development scheme and secondment scheme. We have got a great operating environment. We have got flexible working arrangements and teleworking that staff are picking up. So I think we have got a very productive team. I do not think there has been an impact on morale as such, but I will wait until I survey staff in terms of the outcome of this agreement.
Senator KIM CARR: There is this principle of affordability. There are government-wide bargaining guidelines. How does that affect your capacity to reach a settlement?
Ms Beauchamp : There are two aspects that we had to look at as part of the enterprise agreement: one about productivity and one about affordability. I must say that when the department first came together we had a number of efficiency dividends and other requirements around operating sustainably over the longer term. Early in the department's being, we reduced staff numbers quite dramatically and cut costs and looked at efficiency. So I thought we were on a pretty good glide path to maintain affordability over the forward estimates. What we did in this agreement, or the agreement that just went down, around affordability was look at what savings we could look at around corporate services efficiencies, for example. We had an agreement that was definitely affordable within our forward estimates.
Senator KIM CARR: What changes in conditions are you proposing? What changes, for instance, on leave?
Ms Beauchamp : We are not changing any now. What we had looked at was seeking a few more minutes per day in terms of operations.
Senator KIM CARR: So, longer hours?
Ms Beauchamp : Yes.
CHAIR: Longer hours or longer minutes?
Ms Beauchamp : It was six minutes a day.
CHAIR: Six minutes a day. Okay.
Senator KIM CARR: And what about pay?
Ms Beauchamp : As I mentioned, staff indicated that pay disparity was the thing that we had to address. We had people on quite high pay rates and people on low pay rates. What we wanted to do was pull people through that were on the lower pay rates through to the higher pay rates. So we were looking at providing on average about a 1.6 per cent per annum increase.
Senator KIM CARR: Per annum.
Ms Beauchamp : Yes, for those that were not on the higher pay rates.
Senator KIM CARR: What classifications?
Ms Beauchamp : From APS1 to EL2.
Senator KIM CARR: What was the proposal for the SES?
Ms Beauchamp : No proposals for SES and SES salaries—
Senator KIM CARR: So no pay rise at all for the SES.
Ms Beauchamp : No. Those pay rises have been frozen for some time.
Senator KIM CARR: How many members of the SES voted for the agreement?
Ms Weston : They are not subject to the enterprise agreement.
Senator KIM CARR: They are not allowed in the union anymore?
Ms Graham : They are not subject to the enterprise agreement and therefore they are not allowed to vote.
Ms Beauchamp : Can I just confirm that the SES have had a pay freeze for some time.
Senator KIM CARR: Yes, indeed. For how long?
Ms Beauchamp : Probably two years.
Ms Graham : The same time frame as the other staff.
Senator KIM CARR: So all the officials in the department of industry have had a pay freeze for two years.
Ms Graham : Since the last enterprise agreement, yes; so it is 18 months.
Senator KIM CARR: This is now coming into the second year.
Ms Graham : They are coming into the second year. That is right, Senator.
Senator KIM CARR: Is that not a factor in getting a 77 per cent vote rejection?
Ms Beauchamp : A pay rise was on the table and staff voted against that.
Senator KIM CARR: They want a bigger one.
Ms Beauchamp : Like I said, I don't know. What we were operating on was what we were told by staff through a staff survey back in July 2014. There were three things that they wanted us to address. There was the salary disparity for all officers. They did not want to reopen Christmas close-down. And they were pretty neutral about the removal of non-entitlement material from the agreement into policies.
Senator KIM CARR: What does that mean?
Ms Beauchamp : Things that were subject to policies and already subject to legislation. We were trying to strip out a lot of the things that did not belong in the enterprise agreement, that were not going to basic terms and conditions.
Senator KIM CARR: What things did not belong in the enterprise from your point of view?
CHAIR: Senator Carr, you are quite entitled to ask questions, but we are really drilling down now, and it is almost like we are negotiating an enterprise agreement here now.
Senator KIM CARR: I am not negotiating anything. I am asking a question—what things did you want to strip out of the agreement?
Ms Graham : An example would be the provision of long service leave where there is an act that already provides long service leave for employees. Where those things were replicated in the enterprise agreement, they were removed from the enterprise agreement because there was already legislation enshrining the entitlement.
Senator KIM CARR: What other things?
Ms Graham : I cannot remember all of them. Maternity leave would be another one, I think. I would need to check on some of the other ones. It was only where there was legislation already providing the entitlement.
Senator KIM CARR: Can you give me a list of things that you want to strip out of the agreement?
Ms Graham : We can take that on notice.
CHAIR: And can you put in the things that you want to add in the agreement as well.
Ms Beauchamp : I would like to confirm that we were not reducing entitlements.
Senator KIM CARR: Obviously 77 per cent of staff thought that it was not good enough, so we will see how it goes. I would like to ask you about the cleaning contract. There have been some questions raised about the payment of cleaners. What arrangements do you have for cleaning services in the department?
Ms Graham : We have a cleaning contract with ISS for our properties in Canberra, and the payment of those contractors is by the company that we contract with.
Senator KIM CARR: So has there been any change in the cleaners' pay since the abolition of the Commonwealth Cleaning Services Guidelines?
Ms Graham : That is not necessarily a matter for us. As I said, we have a contract with the provider, and what they pay those people is entirely up to that contractor.
Senator KIM CARR: It has been put to me that cleaners are being asked to accept $2 less per hour, after the abolition of the Commonwealth Cleaning Services Guidelines. Is that the case in the Department of Industry?
Ms Graham : Not as far as I am aware. We have been on the same contract for the last three years. I am not aware of any change.
Senator KIM CARR: When does that contract expire?
Ms Graham : The contract was due to expire on 27 October 2014—last year—and we have been on a month-to-month extension of that contract.
Senator KIM CARR: Will the new contract contain the same pay rates as the last?
Ms Graham : I do not think that the contract contains pay rates for the employees. It is a contract for an overall service. What those companies pay their staff is a matter for those companies and their staff members.
Senator KIM CARR: So is there any reason to believe that, as a result of the contract renewal, cleaners will receive $2 less per hour?
Senator Ronaldson: Senator, you have pursued this with five questions now. You have been told that this is a contract between the department and another body. The department is not engaged or involved in the pay rates for these people, so I think that we have done this one to death. Why don't we move on to something else?
Senator KIM CARR: I just want to know what the effect of the abolition of the Commonwealth Cleaning Service Guidelines is for the Department of Industry.
CHAIR: You have been told in various ways what it is. It has been framed in five different ways.
Senator KIM CARR: I have been told that the existing contract was in place for three years, and then I am told that it expired last October and is being extended on a month-by-month basis.\
Senator Ronaldson: What you have been told is that the department does not determine the pay rates of the cleaners. The department has a contract with a provider, and the department is not engaged in the payment of the cleaners; it has no involvement in that. They negotiate a contract with another body. They have no involvement.
Senator KIM CARR: What is the effect of the abolition of the Commonwealth Cleaning Service Guidelines in regard to the pay of cleaners in the Department of Industry.
Senator Ronaldson: This department cannot answer that question because they are not responsible for the payment of those wages. No matter how many times you want to ask that question—
Senator KIM CARR: You do not know?
Senator Ronaldson: Of course they do not know. This is a contract between the department and another body.
CHAIR: Senator Carr, move on please.
Senator KIM CARR: Can I ask if the Public Service Commission provided you with advice on the enterprise round—the bargaining round?
Ms Graham : In terms of the enterprise agreement, there is a process. The process that we have been going through regularly engages with the APSC. There are a set of approval processes that the department needs to go through to ensure that before we put the proposal on the table it is consistent with the bargaining framework. We were definitely in contact with the APSC throughout that period.
Senator KIM CARR: There was an offer approved by the Public Service Commission?
Ms Graham : Yes. It was approved through the normal process. That is right.
Senator KIM CARR: Do they now advise you that the offer has been rejected? Do you have conversations with the Public Service Commission?
Ms Graham : When we get to a point of putting a revised offer to staff, then it will need to go through the same approval processes.
Senator KIM CARR: Has the APS recruitment freeze in this department ended?
Ms Beauchamp : Not yet.
Senator KIM CARR: When do you anticipate that it will?
Ms Beauchamp : 1 July 2015.
Senator KIM CARR: Have you sought any exemptions from the recruitment freeze?
Ms Beauchamp : It is not a recruitment freeze, if I can just confirm that. We do seek approvals through the Public Service Commission. As you would be aware, there are many specialist positions in the portfolio, with a number of science agencies and technical expertise in other areas. Yes; we have sought exemptions to advertise for those specialist positions outside.
Senator KIM CARR: I notice that there have been recruitments in the Office of the Chief Economist. I do not want to know the details. I do not want to know the individuals names. I would like to know the process by which appointments were made and the APS levels of the appointees.
Ms Beauchamp : I might ask the Chief Economist to come to the table, but—
Senator KIM CARR: You can take it on notice. I do not mind.
Ms Beauchamp : We will take it on notice. In general terms, what I have been trying to do is seek secondments from other agencies so that we can get people coming into the department from outside. But also, if there is a permanent appointment, it is subject to the normal merit selection processes.
Senator KIM CARR: I am particularly interested, in terms of the recruitment freeze, the exemption for the Office of the Chief Economist. How was the selection process managed for that appointment?
Ms Beauchamp : For which position, sorry?
Senator KIM CARR: I understand an SES position, Band 1, General Manager.
Ms Beauchamp : There are a few positions in that area. I will have to take that on notice specifically in terms—
Senator KIM CARR: If you would not mind. How was it managed and was there a selection panel?
Ms Beauchamp : I will take that on notice.
Senator KIM CARR: Were there any declarations of conflict of interest from members of the panel?
Ms Beauchamp : I will take that on notice as well.
Senator KIM CARR: Who is the director responsible for the Entrepreneurs' Infrastructure Program?
Ms Beauchamp : Again, that is not in program 3.
Senator KIM CARR: No. It is a cross portfolio matter—and that is where we are.
Ms Beauchamp : I had put that under program 2, so the officer—
Senator KIM CARR: The question I am asking you is: who is the director responsible? I notice in the organisational chart it sits beneath Entrepreneur Development in the AusIndustry division. If you do not want to tell me precisely who it is, has there been a change in the position? It used to be Doron Ben-Meir. Has that position been filled?
Ms Anton : Your question goes to the structure related to the delivery of the Entrepreneurs' Infrastructure Program. In essence, I am the responsible senior executive within the department for that program on the delivery side. Mr Doron Ben-Meir concluded his five-year working relationship with the department last Friday and has moved on to the University of Melbourne to another position related to commercialisation, where I am sure he will make a great contribution.
We have, as an interim measure, appointed Patrick Mooney as the director of the accelerating commercialisation aspect of the program. I think that reflects an important thing in the structure of how we deliver this part of the program, which is that you do need a great combination of private sector experience coupled with public service knowledge to make this a success. Patrick was one of the commercialisation advisers within the program, and we will look to recruit to that position permanently in the next coming months.
Senator KIM CARR: Are you anticipating to advertise the position?
Ms Anton : Yes, I am.
Senator KIM CARR: Will it be open to external applicants?
Ms Anton : Yes, it will be an open process.
Senator KIM CARR: I am told the department's staffing numbers decreased by 269 positions. Is that right, Madam Secretary?
Ms Beauchamp : I think you might be referring to a table in one of the budget papers.
Senator KIM CARR: I am: Budget Paper No. 4, page 137.
Ms Beauchamp : That is correct. I think most of that relates to changes that happened during the year with the machinery-of-government change, with the movement of the vocational, education and training responsibilities.
Senator KIM CARR: Have they have already occurred?
Ms Beauchamp : Yes, they have.
Senator KIM CARR: There are no further reductions?
Ms Beauchamp : I think our ASL numbers are in our portfolio budget statement, and I think we are around that figure.
Ms Weston : Our ASL number is 2,538 for the year and we are largely at that level already.
Senator KIM CARR: You are not anticipating a need for further redundancies?
Ms Beauchamp : No, as I mentioned at the start of the department, we did most of that.
Senator KIM CARR: The autumn repeal day report, published in March, indicated that the department of industry had savings of $29 million in compliance costs. Can you tell me how that was calculated?
Ms Clough : I will just grab my notes on the closing programs that were announced in that particular publication. There were several that were published. There was a list of them that totalled $29.69 million, and the calculation arises from an estimation of the reduction of burden on likely participants in the scheme in accordance with the government's Regulatory Burden Measurement Framework.
Senator KIM CARR: You will have to explain a little bit more than that; I am not sure I understood any of that.
Ms Clough : The Regulatory Burden Measurement Framework is administered out of the Office of Best Practice Regulation. It is the framework which all government agencies use to cost the impact of regulation on the community, including business. The Regulatory Burden Measurement Framework includes the capture of all activities which impact on business, that includes programs. Where a program ceases, the interaction ceases and therefore, under the framework, it is costed as a reduction.
Senator KIM CARR: Has there been any increase in compliance costs for any businesses as a result of the government abolishing any programs?
Ms Clough : Not to my knowledge for the Industry and Science portfolio.
Senator KIM CARR: If we take the TCF program, it has not actually been abolished, has it?
Ms Clough : I understand that that is part of a package that is still to go through the parliamentary process.
Senator KIM CARR: But it has not, has it?
Ms Clough : The legislation which underpins that has not passed through parliament.
Senator KIM CARR: How much additional resource has gone into the development of legislation to cut the program?
Ms Beauchamp : We would have had our normal legal team working on that as part of the other legislative responsibilities.
Senator KIM CARR: So part of your costings? Actually spending more money on programs that have not actually passed the parliament in terms of preparing a legislation, for instance—would that be part of your calculations?
Senator Colbeck: It has to be prepared before it goes to parliament, doesn't it?
Ms Clough : Technically, no, Senator.
Senator KIM CARR: Technically? Why not technically? I would have thought there would have been an officer involved.
Ms Clough : The costing is not included under the regulation.
Senator KIM CARR: Why not?
Ms Clough : The government has decided that the regulation burden measurement framework include the compliance cost on business in the broader community only.
Senator KIM CARR: So how much money has been spent on companies ringing up the department and asking what is happening to the program, where is it all going, how do they get their money? Is that part of your calculations?
Ms Clough : That aspect is not part of the calculation.
Senator KIM CARR: That is a compliance cost for a business, though, isn't it? The textile industry—wouldn't there be business ringing up asking about how they get access to the money for a program that the government says it is going to abolish but has not been abolished?
Senator Ronaldson: Why don’t you ask them whether those phone calls have been received, before you make the assumption they have.
Senator KIM CARR: Do we have any officers left in the textile division.
Senator Ronaldson: Come on: just get on with it!
Senator KIM CARR: That would be that, I suppose.
Ms Beauchamp : Senator, we do have a great streamlined website now, though business.gov where a lot of businesses are accessing information on the program you have mentioned and a range of others.
Senator KIM CARR: You have got a website—what does the website tell us about this program?
Mr Lawrence : The website for business.gov says that the program status is open and that it is part of the 2014 federal budget. The government has announced its intention to close the program one year earlier than previously scheduled. The related legislation has passed in the House of Representatives on 5 June; however, it has not yet been debated in the Senate.
Senator KIM CARR: So businesses can still apply for money, can they?
Mr Lawrence : I will leave that to my AusIndustry colleagues.
Ms Facey : Customers have been advised that they should apply to register for BIC by 1 June ideally, and at the moment we have 155 customers registered. Technically, they can apply until 30 June, but we advise them to apply by 1 June so that they would have complete applications in place in time.
Senator KIM CARR: You could help them make sure their applications are in order.
Ms Facey : Yes, absolutely.
Senator KIM CARR: So you are spending time on the program? Officers are spending time on this program?
Ms Facey : Certainly we have been registering those companies who have applied to register.
Senator KIM CARR: Which you are required to do by law?
Ms Facey : Absolutely. It is a legislative program.
Senator KIM CARR: This is part of the Autumn Repeal Day report.
Ms Beauchamp : Senator, I think it was already mentioned that we are looking at the compliance costs between the industry and externally.
Senator KIM CARR: But this is a compliance increase in costs here.
Ms Beauchamp : I think, internal to the department, Ms Clough mentioned that those costs were not included in the determination of the costing for the Autumn Repeal Day.
Senator KIM CARR: They are not included.
Senator Ronaldson: No, they are not, and it has already been stated.
Senator KIM CARR: You have not got the Innovation Investment Fund on this list, or the Innovation Precincts or Enterprise Connect. I am just wondering why it is that some programs are on your list and some are not.
Ms Clough : You are referring to the programs listed in the Autumn Repeal Day?
Senator KIM CARR: Yes.
Ms Clough : That is a subset. The Autumn Repeal Day counts programs, a certain number of which were listed since the previous repeal day. Ones which had not been reported previously were listed in a repeal day. It is not the total of closing programs; there are others and a full listing of those is contained in the Industry and Science Portfolio Annual Deregulation Report at Appendix C.
Senator KIM CARR: I am wondering how the rationale works here. It seems to me it has been suggested that the department looks at the administrative costs, any money associated with running programs, that it is said that these are compliance costs when the program is closing down. Is that the way it works?
Mr Lawson : It is not the administrative costs within government; it is the burden of costs upon industry. So the main focus of the report is on the larger measures, things like streamlining the offshore environmental approvals with NOPSEMA taking on the role jointly which was previously shared between them and the Commonwealth Department of Environment, that sort of regulation reform which we reported as a $60 million save and a total of $120 million save in reducing regulatory burden without reducing the environmental outcomes. Having a single agency responsible for doing the job means that they do the job better and industry has a much clearer idea of where they are going. What I am getting at is that there is a list of measures. They start with the large ones and move down to the smaller ones and some of the very small ones fell off the list.
Senator KIM CARR: Is it the case that you have saved $29 million per year? Is it every year?
Ms Clough : I think it is an annual figure.
Senator KIM CARR: It goes on, does it?
Ms Clough : To the extent that where programs are budgeted, the life the program would be the primary determinant of the save.
Senator Ronaldson: Taking red tape burden off businesses is a good thing. Your background was of course about putting the red tape in. You do not even understand what the process is. You have spent 10 minutes talking about matters which you clearly do not understand. This is not an internal compliance place; it is outside. We are now wasting time.
Senator KIM CARR: How many officers are there now in the red tape production unit?
CHAIR: Senator Carr and Minister, we are nearly at the end of Senator Carr's questioning.
Senator KIM CARR: I know, I am being inspired by—
CHAIR: Everyone has remained calm and we are going to continue to do so.
Senator KIM CARR: How many officers are there in the red tape production unit?
Ms Clough : There are 13.85 FTE
Senator KIM CARR: And that is same as last time, is it?
Ms Clough : No Senator. Last time it was in the order of 20.
Senator KIM CARR: So there has been a reduction in the red tape unit?
CHAIR: Yes because we have reduced red tape.
Senator KIM CARR: It was the only area of the department that was growing and now it is contracting. Why has there been a reduction in the number of offices?
Senator Ronaldson: We have $29 million picked up and we have actually reduced the unit, so it is a win win.
Senator KIM CARR: There are seven fewer officers since February. Is that how it is?
Ms Clough : Yes, there has been a small reduction in staff.
Senator KIM CARR: Small? About a third? That is not small. That is how you measure red tape reduction though, is it not? These sorts of figures are—
Mr Lawson : If I could go back—
CHAIR: Just hang on. I am very serious when I say that this is not going to unravel. Seven is seven and as a percentage of 20 it is roughly a third. Can we move on.
Senator KIM CARR: Why has there been a reduction of a third in the red tape reduction unit?
Ms Weston : Can I say that in terms of setting up the proposals around reducing red tape, getting across the costing methodology, talking to stakeholders and the like I would expect more people to be involved in the set-up arrangements and then fewer as we move through the years and gain experience. There are also people working in the relevant subject areas to assist Ms Clough's area as well. It is probably not relevant to say there has been a reduction of seven because all of us in the department are focused on reducing red tape and we all think it is a very important issue for all of our business. So while Ms Clough coordinates and works with the Department of Prime Minister and Cabinet in terms of the reports you are referring to, we do take this seriously across all subject areas.
Senator Ronaldson: What a remarkable notion: you reduce red tape and you reduce the number of people who are there to implement it and to manage it within the department. This is just completely nonsensical.
Senator KIM CARR: So, there has been a productivity improvement, is that right?
Senator Ronaldson: If you are reducing the regulations, then of course fewer people are going to be required to implement them.
CHAIR: Can we move on?
Senator KIM CARR: Regarding board vacancies, there are currently six vacancies on the Innovation Australia board. Is that right?
Ms Beauchamp : I think I would have to look at what the minimum and maximum amounts are for the Innovation Australia board. That is one of the boards that the minister has indicated he wants to reshape. I will just confirm that. The reason I have been a bit general is that you can have between four and 13 members on the Innovation Australia board.
Senator KIM CARR: How many do you have at the moment?
Ms Beauchamp : I will get to that in a moment, but this is one of the boards the minister definitely wants to reshape, acknowledging that it is a statutory requirement. But I think when he put together the advisory group for the growth centres—we are looking and he is looking at how we reshape the Innovation Australia board. So, it is probably not relevant to refer to the number of vacancies, because we are looking at between four and 13.
Senator KIM CARR: There are currently eight on the board. Is that right?
Ms Beauchamp : That is my understanding, yes.
Senator KIM CARR: When you say you reshape, does that mean fill the vacancies?
Ms Beauchamp : I said that they were not necessarily vacancies, because the minister is having a good look at what he wants this board to do, sitting alongside the other boards that have been set up in the portfolio.
Senator KIM CARR: Within the act?
Ms Beauchamp : Within the act, indeed.
Senator KIM CARR: When will the minister be making a decision with regard to the reshaping of the board?
Ms Beauchamp : That is a decision for the minister, and I would have to take that on notice.
Senator KIM CARR: As I read it, there are a further four vacancies that arise by the end of October this year.
Ms Beauchamp : As I mentioned earlier, I do not think it is relevant to talk about the number of vacancies, because the minister wants to look at the purposes, the scope and what the board is to do in the context of the act and sitting alongside his other boards. So, he will make a decision on the numbers to be filled.
Senator KIM CARR: There has already been an attempt to close this board, hasn't there?
Ms Beauchamp : Sorry—what do you mean by 'an attempt'?
Senator KIM CARR: Well, we went through this before, and I think the officer had to correct the record on this matter, but the minister did go to a board meeting and say that they wanted to close the board, only to find that he could not, because of legislation.
Senator Ronaldson: This was fully canvassed at the last estimates. You were not right now, and you are not right now. So, can we can get on to a subject that has not been flogged to death before?
Senator KIM CARR: What is the quorum requirement at law?
Senator Ronaldson: You have just been told by the secretary that the minister is looking at a variety of these arrangements and boards. She has said to you that looking at board vacancies is not relevant in the context of that. So, can we possibly get on to something that might be relevant to these estimates?
Senator KIM CARR: What is the quorum requirement at law?
Ms Beauchamp : At the moment it is four. I think I mentioned that earlier.
Senator Ronaldson: We have been talking about this for the last three estimates.
Senator KIM CARR: And has the board been meeting in an inquorate manner at any time this financial year?
Ms Butler : No.
Senator KIM CARR: How many members have attended meetings this financial year? You can take that on notice if you like.
Ms Beauchamp : Thank you, yes, we will.
Senator KIM CARR: What is the department's market research budget for this year?
Ms Beauchamp : I would have to take that on notice.
Senator KIM CARR: How much did the department spend on market research last financial?
Ms Beauchamp : Again, I will take that on notice.
Senator KIM CARR: Can you provide a breakdown of the subject of each market research contract in 2014-15, the value of each contract, the organisation or company engaged to do the work, any focus groups that were involved and the period covered by any contract?
Ms Beauchamp : That is a lot of work, but I will take that on notice.
Senator KIM CARR: I would like to know, in respect of each contract, the subject of the market research, what focus groups were involved, how many and on what dates, and the cities in which the focus groups were convened. Can you provide that one on notice as well? And what market research was undertaken to help inform advertising and communications campaigns? If there was any, what was the total budget for such campaigns and the breakdown of the various components, such as the media buy, the design, creative services, the website development and market research?
Senator Ronaldson: We will take the question on notice, and those things that we are able to provide you with we will. You have a very long list there. They may have been sourced to others such that the information is not readily available to the department. We will give you what we have knowledge of.
Senator KIM CARR: As distinct from market research, what was the department's total spending on advertising in 2014-15—
Ms Beauchamp : Does that include advertising for positions?
Senator KIM CARR: Yes, the advertising budget. And you may break that down, if you would, into the different categories of advertising. Have any of your advertising campaigns gone to the Independent Communications Committee? Mr Savery, welcome. Can you tell me what is happening with the work that the other officers have referred to regarding the aluminium cladding issue? We were advised earlier in the day that you were undertaking some work regarding aluminium cladding. Could you advise the committee of the nature of that work?
Mr Savery : The main pieces of work at the moment are subject to board consideration, because we have not had the opportunity to talk to our board about this. They relate to the review of the testing methodology under the Australian standard for external wall cladding noncombustibility, which was a recommendation of the Metropolitan Fire Brigade's post-incident report.
Senator KIM CARR: That is the Melbourne Metropolitan Fire Brigade?
Mr Savery : Yes, the Melbourne Metropolitan Fire Brigade. That work had actually already commenced, because, as you would appreciate, Australian standards are regularly reviewed, and that was an area that was already under examination. We are also considering developing a handbook for practitioners on what to look out for in terms of potentially non-complying product. That relates to provisions within the national construction code that are called evidence of suitability. Without boring you with the detail, in the national construction code there is a provision that sets out the methods by which practitioners—be they building surveyors, architects, designers or engineers—should be establishing for themselves the products that are suitable for the purposes for which they are going to use them. We believe that those provisions could potentially be clarified to assist practitioners in better understanding what it is they should be looking for.
Senator KIM CARR: That is very good. Is any other work being undertaken?
Mr Savery : Not specifically, as I understand it, in relation to the Lacrosse fire issue, but there are other activities occurring by states and territories relating to their jurisdiction, because the ABCB is not a compliance authority. We are waiting in particular to know what the outcomes of the Victorian Building Authority's investigations are, because they may lead to other things that we may want to consider.
Senator KIM CARR: When do you anticipate a response from the Victorian Building Authority?
Mr Savery : We are not aware of what the time line is for the completion of their investigation, bearing in mind that our understanding of their investigation is how a non-complying product came to be on that building.
Senator KIM CARR: Yes, that is not a bad point. How many other buildings do you think it is on?
Mr Savery : I have no idea whatsoever. Obviously we are aware that the Victorian Building Authority has issued instructions to 170 building owners in metropolitan Melbourne to inspect or advise on whether or not their properties have this product or a similar product, because it is not just this product that potentially does not comply with the national construction code.
Senator KIM CARR: Do you have a list of other products that do not comply, that you are aware of?
Mr Savery : No, but we are aware that there are other aluminium cladding products that exist in the Australian market that do not meet the Australian standard for the purposes of external wall cladding on a type A building, and they should not be used in those cases.
Senator KIM CARR: So, how do they get on to buildings?
Ms Savery : Potentially there are a number of ways they might. The product may have been substituted. It may have been approved but is inappropriate. There is nothing to indicate in this case that the product manufacturer has provided any false or misleading evidence about the product, but there could be a circumstance in which a product has been fitted as a result of false and misleading advertising, but we are not aware of that being the case. So, there is possibly a range of reasons that a product could end up in that situation.
Senator KIM CARR: The question of import restrictions is a matter I am concerned about. The Customs (Prohibited Imports) Regulations: does your work go to providing evidence on that?
Ms Savery : No. The ABCB has no jurisdiction.
Senator KIM CARR: Will you be able to provide advice to the building industry ministers forum on whether or not action should be take with regard to the prohibition of imports for this product?
Mr Savery : That would be very difficult, bearing in mind that this product is suitable for use in many circumstances, and the product manufacturer has not, as far as we know, imported it for the purposes that it was used on this occasion.
Senator Ronaldson: It is really important that in this matter this was the use of a non-conforming product. That is what was found by the ABCB in the VBA.
CHAIR: We went through this earlier this morning as well.
Senator KIM CARR: You will have your report for the building ministers meeting. What is the date of the meeting?
Dr Byrne : The building ministers forum is on 31 July.
Senator KIM CARR: I will ask at the next meeting how it has gone. Thank you very much. That concludes my cross-portfolio questions.
Proceedings suspended from 12 : 18 to 13 : 21
CHAIR: Welcome, Professor Chubb, Chief Scientist to Australia. Thank you again. It is good to see you here. Do you have an opening statement that you want to make?
Prof. Chubb : No, I am ready to go.
CHAIR: You do us a great honour by extending your service here in 2015, which is terrific. Did you want to give an overview of what you think is important that is going on out of the Chief Scientist's office right now.
Prof. Chubb : Right now we are about to start a consultation process on the development of a whole-of-government science policy, science strategy. That will take a few weeks and months until the end of the year when I leave. Hopefully it will be completed by then. That is focusing on four main pillars: innovation, education, research and international engagement. We are approaching that with a consultation paper that will go out later this month. Then we will have a series of roundtables dotted around the country to get some input into that. Basically, the position is: is the government response to my recommendations from last September appropriate? In other words: are the adequate, are we missing things, are there things we should be doing or are they all okay? That will, I hope, lead to a significant shift in the way we approach support for science in the country and will give us some long-term capacity that will enable us to build appropriate capability. Embedded within that but already released are our science and research priorities. They went out a couple of weeks ago, launched by the Prime Minister and Ministers Pyne and MacFarlane and me. We are now doing the back-office work on that to map what we presently do in those areas and which proportion of our present $9.2-odd billion—if you count it all, or $7.2 billion if you take out the tax R&D rebate—do we spend on those priority areas? I was really pleased to see that the ministers—state, territory and federal—agreed to a national STEM policy for schools, announced last Friday. That is consistent with what I have been arguing in the STEM strategy paper.
CHAIR: Why do you support that? I saw some comments that you made. You are an ardent supporter of that.
Prof. Chubb : Because we are going backwards. We would be one of the few developed countries in the world going backwards as fast as we are. My basic argument is that, when you project out ahead, most of the big problems that we will have to confront will need science. They will need science either from scientists or they will need a higher level of science literacy in the community, and we can only get that through the education system.
CHAIR: So years 11 and 12?
Prof. Chubb : All through, of course—but to get to years 11 and 12, yes.
CHAIR: They are the critical years.
Prof. Chubb : I would start a kindergarten, myself. That is what the Germans are doing, for example, on quite a large scale now. They are introducing, into a fair sized number—I cannot think of the exact number—of preschools, programs for science. The have a couple in Australia, supported by the German process. A lot of the countries that we would compare and contrast ourselves with are doing these sorts of things, and I think we have been slow off the mark. We have had a lot of policies, some of which are very good, but they are not particularly connected. So, it is connections that we will be trying to build now that give it that whole-of-government approach, whether it is education, research or international engagement. Those things are good. I think the school policy, prospectively, is good.
On the research priorities, we have identified what we think are particularly important things to be doing right now and to make sure that we invest in right now. The back-office work will show how much we do, and then decisions will have to be taken down the track as to whether we have that profile of expenditure correct—or enough.
We are doing the research infrastructure review, and I sit on that panel, along with Phil Clark and a few other people. It will report in July. That will be a significant contribution to the discussion that we have to have about how we build capacity and sustain capability in Australia to meet all the challenges that we as a nation and, indeed, we as one of the living systems on the planet will have to confront. So, there is a lot of work on.
CHAIR: More than just your year!
Prof. Chubb : Well, since I started the ball rolling on a lot of this stuff a couple of years ago, I am anxious to get as much of that done as we can by the end of this year. Otherwise, somebody else will come in and want to do something different.
CHAIR: No, we do not want that. We do not want that. Senator Carr, do you have questions?
Senator KIM CARR: Yes. Perhaps we could get this out of the way quickly: what is the website traffic like?
Prof. Chubb : After last year's embarrassment for you, Senator, I did not actually bring the numbers with me this time! But I can tell you there have been 352,462 individual hits since last estimates.
Senator KIM CARR: Is that right?
Prof. Chubb : Yes. Approximately.
CHAIR: Up until last night at 5 pm!
Prof. Chubb : Up until last night.
Senator KIM CARR: Well, you did not bring it with you!
Prof. Chubb : I did not bring it with me.
Senator KIM CARR: Can I just follow up on some of the remarks the chairman has made about the proposal. Regarding the treatment of STEM in schools, you issued a press statement on 26 May, noting that the minister for education was expected to put a proposal to the Education Council meeting, and reiterating the position you have put forward many times:
… science and mathematics have to be so compellingly well taught that students will want to study them.
What are your recommendations in regard to the most comprehensive way of getting students prepared for and interested in a career in STEM? What is actually required?
Prof. Chubb : I think that the foundation for it all is that all STEM subjects—and not much engineering is taught in schools, of course, so we are talking primarily about science, technology and mathematics with respect to schools—be taught as they are practised. When it is practised, it is awesome, fantastic. You discover things. You learn things. You learn things about nature. You learn things about the constructed world, not just the natural world. Taught the right way, showing young people how awesome it is, either they will either learn it and go on to be members of the community with the capacity to make informed judgements when they have to make a judgement or they will become scientists. Both are important.
Senator KIM CARR: You would have noted the comments regarding the question of providing incentives for enrolment in STEM at universities. You would be aware of comments made by Mr Norton, for instance, and comments made by Judith Sloan in The Australian that it is not necessary to provide any incentives here because the market will determine these things. How do you respond to that proposition?
Prof. Chubb : I disagree with Judith Sloan. But I am quite pleased to be able to say that I have never agreed with anything that she has said. So it is a good position to be in—a healthy position to be in. I do not know that there is a country in the world that we would compare and contrast ourselves with that is not taking some steps to ensure that we can build our science, our STEM, capacity. In the US, some papers come in from The Washington Post last night announcing more movement in the US. So the country built on the free market is paying substantial sums now to improve STEM teaching in schools and to increase the number of STEM teachers available for schools. They have connected with industry. There are some very powerful industry groups behind it. All of those things, I think, are steps that countries are taking. We should be looking at them, too.
When you talk about what the employment characteristics were of last year's graduates three months after they graduated, there are two things you have to remember: firstly, it was three months after they graduated; secondly, they made their study choices in 2007-08-09—that sort of time. I do not accept the view that by looking in the rear vision mirror we can project the future. We have to think about the sort of business world we want, the sort of industry we want and the sort of capabilities we want as we sail off into the future, not lament choices that people made in 2007 or 2008 because of some survey.
Senator KIM CARR: I read a piece in the Melbourne Age that you authored talking about the employment prospects of people in year 12. I think the observations you were making there around jobs, not just for today but for the future, included the fact that people starting today may well be seeking to work for the next 50 years. What contribution, in your judgement, would STEM make to those jobs for the future?
Prof. Chubb : Again, if you look around at what the rest of the world is thinking about then you would now believe that something like 60 or 70 per cent of the jobs into the future will require some STEM knowledge. The level of that does not by definition mean PhDs. In some jobs, it might not mean by definition Bachelor of Science degrees; but it means STEM knowledge.
Senator KIM CARR: But it means vocational education, as well?
Prof. Chubb : And vocational education. So it would be unwise of us to neglect to understand and to respond to what the rest of the world is doing. What we cannot afford to do, I believe, is to be left behind. We cannot afford to be, in my view, a country with an economy dependent largely on the service industries. They might be important—resources, of course, are important—but sooner or later we are going to have to make something. We are going to have to make something that people want, both domestically and globally. How we prepare for that, how we change our mindset, how we develop new industries, new businesses or whatever it might be, when you look around at all of the projections that I can find then you will find them all saying that STEM will be somewhere in the mix—significantly in the mix.
Senator KIM CARR: I am told that 15 per cent of engineering students are women. Would that be right?
Prof. Chubb : That is about right, yes.
Senator KIM CARR: So there is also a gender question here, isn't there?
Prof. Chubb : There is. And to be very frank, I do not know what to do about it. What I do know is that, in my experiences as a senior academic going back to the 1980s—1986—through to now, many programs have been tried to get women into what were called non-traditional disciplines, like engineering. But when you look at the graduation rates, they have been as flat as the Nullarbor Plain for the last decade plus. Each of these programs are worthy in their own right but they are not making a scaled-up difference to the enrolment patterns. So, out of my office, we are working with the academy to try to develop a different approach to attracting women into, first of all, subjects like physics, chemistry, mathematics and advanced mathematics in school and then subsequently into programs like engineering.
But I should also say that, whilst we can be a little despondent at the numbers and the lack of increase in those numbers, it is a problem that is common to many countries in the world. We are looking very closely at what, for example, is happening in Britain, where they are responding to that specific issue with well-designed programs. We will be trying to trial some of those in Australia to see if we cannot make a big difference.
Senator KIM CARR: There is the question, though, of the quality of teaching. You have made the point that, if you want to get students—whether in vocational education or in higher education—to actually undertake STEM subjects, they need to be inspired through great teaching. I am just wondering: have you read anything of the latest offers in teacher education? Are you familiar with the latest preference application offers in the field of education?
Prof. Chubb : You mean for this year's enrolments?
Senator KIM CARR: Yes.
Prof. Chubb : No.
Senator KIM CARR: My understanding is that students with ATARs of less than 50 are now about 12 per cent of those in education, so nearly 900 students enrolled in teaching—or being offered places in teaching, to be absolutely precise—have ATARs of less than 50. In regard to students with ATARs of more than 90, the lowest percentage group remains in education. What is your view about that?
Prof. Chubb : First of all, what I remember from when I did some work on that personally two or three years ago is that—these numbers are approximate—there were about 500 or 600 students enrolling in pre-service education with ATARs above 90.The median score for education in those days—it would perhaps be a bit lower now, I suspect—was about 70. The median entry score for science was about 90 for that year's enrolment. So what I think we have to do is to try to get some of those people studying science to go into teaching as a career after they graduate, with properly designed and constructed courses to give them the pedagogical skills they need to deliver their subject matter awesomely well. I once proposed that we offer an up-front grant to some of those students so they did not have to go and wait on me when I go to the local restaurant; they could actually get paid to be a student, and then they would work off the loan if they taught, just like in the old days. That did not fly, but I still think it is a good idea. I think somehow we have to attract some of these very high-performing students into becoming high-performing, quality teachers. Then, having done that, we have to support them through their career. There is no point in saying, 'We'll give you a good pre-service program, and after that you're on your own.' We have to look after professional development, and we have to give teaching as a profession the esteem that it warrants when you think that they have the future of this country in the palms of their hands for at least 12 years.
CHAIR: Hear, hear!
Senator KIM CARR: I will take that to the next stage, in terms of people being able to get jobs or employers being able to get workers to fill jobs, I understand you are undertaking a survey of employers in regard to STEM skills. Is that the case?
Prof. Chubb : Indeed, yes.
Senator KIM CARR: What are your findings there?
Prof. Chubb : Well, it is not just us; I think AiG and BCA have made similar comments—that they find it very hard to recruit graduates and/or tradespeople with the skills that they want in the quantities that they want, and those who project ahead are anticipating increasing difficulty in getting those sorts of skill sets that they believe they will need for their businesses to prosper. So the thing that I do not particularly understand is the gap between that assertion and the fact that we have a number of people who graduated with a BSc last year who are still looking for work three months after they graduated. My explanation for that is that employers, on the one hand, say, 'You studied physics; we don't need physics,' and a lot of people who studied physics say, 'I want to work in physics because I studied physics.' My view is that a Bachelor of Science degree equips you with such a range of skills—from the quantitative to the analytical, and from respect for evidence to the rigour of argument and debate—that they should be able to be employed in anything that they want to do, and use these skills that are sitting alongside their deep knowledge of physics or chemistry or biology. So we need a culture shift, basically, and one of the things that I am pleased about is that I would say that, in the last six to eight months, or certainly in the last few months, there has been a big increase in the public debate about this. There are some who, as you described earlier, say, 'Why would we do anything? Let what appears to be a market rip,' when in fact most of the world knows that the market is sometimes prone to failure, and I suspect that this is an instance where it is.
On the other hand, if you look at 457 visa entries we bring in a lot of people with those skills on 457 visas, particularly in IT. So the universities have got to get their act together better and produce courses that are actually valuable within the discipline as well as alongside it. Employers have got to get their act together and begin to talk to universities and they have got to have a real communication about what is required—what sorts of skill sets people need. The schools have got to have good teachers who are well prepared, well presented, able to present well and who are supported through their professional careers. And if we get all those pieces fitting together then the puzzle that will be the future of Australia will be well solved because we will have all the pieces in the right places.
CHAIR: You should go into parliament!
Prof. Chubb : Well, I don't know—I've watched question time!
Senator KIM CARR: I can just imagine you in question time. Can I turn to this issue of the science strategy, which of course is related to the boost in commercial returns for research programs. I have asked Education about this matter, for which they have leads in most of the areas—would that be correct?
Prof. Chubb : I try not to get involved in interdepartmental issues because I find them immensely frustrating—notwithstanding the magnificent support I get from the Department of Industry and Science.
CHAIR: And how wonderful the industry department is.
Prof. Chubb : Of course, the secretary did ask me to say that!
Senator KIM CARR: There are deadlines in some of these 14 items on the action agenda. What is your judgement as to how likely we are to meet those deadlines?
Prof. Chubb : In the boost in commercial—
Senator KIM CARR: Yes.
Prof. Chubb : I think that we will meet most of those.
Senator KIM CARR: One of them goes to the issue of international connections and engagement. You made this point a number of times in relation to the science strategy—as I notice, for instance, in the Hansard from last time around—and I asked the department of industry on notice last year whether there was any progress underway to examine the extent of engagement in international science and research, and how that might be improved. My recollection is that the response was that there has been no progress. Would you agree?
Prof. Chubb : No, I do not agree with that. I think that a number of the relatively small programs—still, probably, in my view, disappointingly small programs—are now being focused on priority areas, of more strategic application to bilateral arrangements with other countries. There are serious discussions with the European Union for a bilateral with the EU. But of course that means that there are also bilaterals with countries within the EU. I think there is substantial movement on it. As you know, it is not always easy to have these bilaterals with countries. I have been engaged in a number of those discussions and I think there is a keen interest in a number of countries to work with Australia.
There is always been an interest in those in Australia, but there is now an interest in being more strategic in how we do that. If we have a small amount of money, rather than spend it across a large range of projects where we share priorities—and all the countries we are talking to have research priorities and technology priorities, whether it is the US, the UK, the EU itself or the whole federation—we can be more strategic in that and we can grow from that strategic base. As I have argued often, it is critically important for our future because we are, in many areas, very high quality but still a relatively small player.
Senator KIM CARR: Can I have the answer to question no. S111.
Ms Beauchamp : I was just going to add to what the Chief Scientist was saying. I, too, do not believe there has been no progress in our international science engagement. Obviously the government has provided funding for the India research fund and the China research fund. Only just recently the Chief Scientist accompanied the minister on an international trip and made many connections in the US on science engagement. The minister is again scheduled to go overseas, also looking at furthering our science engagement with countries overseas. We get a number of delegations here that are interested in developing MOUs and the like. There is a lot we are doing together with the department of education. I do not think there is a turf war or anything with the department of education. There is a lot happening in the international engagement space. I do not know if the Chief Scientist wants to talk further about his recent trip accompanying the minister.
Senator KIM CARR: What international science programs are there in your department?
Ms Beauchamp : We have the India and China research funds.
Senator KIM CARR: How much for the India one?
Ms Beauchamp : I will have to get the CFO to come up.
Senator KIM CARR: My recollection is that it is not a great deal of money.
Prof. Chubb : No, it is fairly small.
Senator KIM CARR: And how much for the China one?
Ms Beauchamp : We are just waiting for the CFO.
Prof. Chubb : It is not a lot, no.
Senator KIM CARR: These are our major trading partners.
Prof. Chubb : While those figures are being looked up, I would say that one of the changes has been that these will become much more strategically driven.
Senator KIM CARR: That is usually what you say when there is nothing much left to do.
Prof. Chubb : No. It is what you say when it is important.
Mr Medland : I am the chief financial officer. In the department portfolio budget statements on page 29 it outlines the funding for the Australia-China Science and Research Fund. In 2015-16 it is $1.6 million, in 2016-17 it is $3.7 million, in 2017-18 it is $2.5 million and 10 2018-19 it is $2.2 million. For the Australia-India Strategic Research Fund in 2015-16 it is just over $4 million, in 2016-17 it is $2.5 million, in 2017-18 it is $2.2 million and in 2018-19 it is $1 million.
Senator KIM CARR: So it is about $10 million, is it?
Mr Medland : I think it is a bit more than that.
Prof. Chubb : About that.
Senator KIM CARR: It is about $10 million. For China, it is a little bit less than $10 million.
Prof. Chubb : It is bigger.
Ms Beauchamp : Yes, it is bigger.
Senator KIM CARR: How much is the total for the China fund?
Mr Medland : It is a bit under $10 million, but that is an ongoing program.
Senator KIM CARR: It is an ongoing program; that is true. But we spend $9.2 billion on research in this country and we are spending less than $20 million in these two countries. What about Japan? What happened on the Japan one? Has that been renewed?
Ms Beauchamp : I would have to take that on notice. I only mentioned those as examples, but there are other things that we are engaged in with other countries. There is the SKA project—
Senator KIM CARR: I know there is an enormous amount of interest. That is a great thing, particularly when you need to travel. But what is actually happening in that international engagement?
Prof. Chubb : Do you mean projects?
Senator KIM CARR: Yes.
Ms Beauchamp : We can go through some of those.
Prof. Chubb : I do not know the projects.
Ms Beauchamp : I will have to get those—
Senator KIM CARR: What specifically in regard to government—
Senator Ronaldson: You have asked the question and we will get you the answer. We will get you some of the projects.
CHAIR: Do you have another line of questioning, Senator Carr?
Senator KIM CARR: While we are waiting for—
Prof. Chubb : As part of the strategy proposal that we are now going out and consulting on, one of my recommendations was, for example, that we set up an Asian area research zone to be able to share people, infrastructure and the like. We will be road-testing that over the next few weeks. It also is designed to build on some momentum that already exists with programs in China, Japan, India and other countries in the region.
Senator KIM CARR: While we wait for the answer to that previous question, can I turn to the Boosting commercial returns from research paper. What exactly is your role, Chief Scientist, in regard to that particular—
Prof. Chubb : Which one is that?
Senator KIM CARR: Boosting commercial returns from research.
Prof. Chubb : I was involved in the round of consultations that occurred before the final paper was prepared and saw the final paper, including the recommendations. But, since then, my role has been marginal.
Ms Beauchamp : As you may have realised, the minister recently put out a release on the action plan against the Boosting commercial returns from researchrecommendations. I will get the date of that shortly.
Senator KIM CARR: Sure. But I was asking about the Chief Scientist's role, and the answer I have been given is 'marginal'.
Prof. Chubb : So far. There will be overlap with the strategy. There will be overlap with the priorities. So I will be engaged as appropriate.
Senator KIM CARR: So there is no process underway—
Ms Beauchamp : There is a process—
Senator KIM CARR: I must have misunderstood this. I asked the question, 'Is there any process underway to examine the extent of Australia's international engagement with science and research? How can that be improved? How many stakeholders were consulted?' and so on. You have the question in front of you. What does the answer say? It says, 'There is no process underway.'
Prof. Chubb : That might have been true in November; I do not believe that it is true now.
Senator KIM CARR: Oh, right.
Prof. Chubb : I think Ms Urquhart would be able to—
Senator KIM CARR: How has it been corrected?
Senator Ronaldson: Let's hear from Ms Urquhart.
Ms Urquhart : In respect of the answer last year, it is correct that at that time there was no process underway to develop an international science engagement strategy. There was a well-established science engagement strategy within the department that we were abiding by—
Senator KIM CARR: We know something about that, but go on.
Ms Urquhart : in the activities we were pursuing. I should note that, as I think the Chief Scientist said, the idea of pursuing development of an international science engagement strategy for whole of government is part of the STEM recommendations in the Chief Scientist paper from September last year. That is one of the possible policies and actions that were taken to the Commonwealth Science Council in April and will form the basis of a discussion paper for consultation in July. So certainly there is a process underway now to examine that.
Senator KIM CARR: We have a discussion paper—okay.
Prof. Chubb : No, we have actions.
Ms Urquhart : In our current approach to international science engagement, we have a set of tiered partners that we prioritise. Tier 1 partners tend to be global science and technology leaders that have a pull-up effect on our innovation system. Tier 2 partners are strong performers with whom we share common interests and similarities between our innovation systems and with whom we often have a long history of collaboration across fairly particular sectors. Then we also have particular partners that are mid- to low-level performers but are increasingly competitive and improving in their international ranking—so emerging powers, I guess you could say, in terms of science and innovation.
Senator Ronaldson: Could I table please a press release from 26 May this year from the Minister for Education, the Minister for Industry and the Minister for Health regarding the announcement of the strategy boosting the commercial returns from research. That arose from extensive consultation undertaken on a discussion paper, on boosting the commercial returns from research, released in late 2014.
CHAIR: Thank you.
Senator BUSHBY: In response to Senator Carr's questions you went through a number of measures that you thought would be an appropriate way of helping increase the engagement of students and hopefully in the end the enrolment numbers of students in STEM subjects—all of which sounded like they are worthy of deep consideration, but one that you did not mention was discounting the cost of students studying in STEM areas. Many credible experts such as Professor Bruce Chapman, Andrew Norton, the Australian Mathematical Sciences Institute and the Group of Eight suggest that HECS discounts are not an effective means to boost enrolments. I think even the previous minister for tertiary education, Senator Chris Evans, has stated something similar when he was winding up a scheme that tried to do something like that under the Rudd government. Yesterday, in a different estimates, we heard that the cost of writing off the HECS debt of 100,000 STEM students, as has been proposed elsewhere, would be at least $2.25 billion.
Senator KIM CARR: That is not what we heard.
Senator BUSHBY: Excuse me. I am asking the question. That is what I understand to have been the evidence that was given at a different estimates committee. If that is the case, do you think that money would be better spent on the measures that you were discussing and would go a long way to covering what you were hoping you could achieve with those measures?
Prof. Chubb : You are asking for an opinion that I am not sure I am well placed to give. I will say that when the HECS discount was first introduced in around, I think, 2008 the number of science students since then enrolled at universities increased each year. I am old enough and wise enough to know not to draw too big a conclusion about cause and effect. There were a lot of other things being done at the same time. But there is no question that the number of enrolments increased from around about the point the HECS discount was introduced. What I am waiting to see is if it has had a shift on the overall study profile of the students. Not that there is a difference in cost, but just whether or not they are doing different things because of a different pipeline coming through the school system and whether or not they go down again when the HECS discount has been removed. I do not have the data in my head that indicates that. I think it is too early. Did it come off—
Senator BUSHBY: In 2011, for the 2012 year I would imagine. The bill was passed then.
Prof. Chubb : That might be true, but there still students grandfathered presently, who enrolled earlier. So the numbers are not hard enough yet to draw some inference about cause and effect, but the number increased.
Senator BUSHBY: But you acknowledge there are a number of expert commentators who consider that it is not the most effective way.
Prof. Chubb : Sure.
Senator BUSHBY: I am not to say that it does not have any effect. I am sure it does to some degree, but whether it is the most effective way of addressing the enrolment numbers in STEM subjects—
Prof. Chubb : There are people who say that, yes.
Senator BUSHBY: Would you disagree with them?
Prof. Chubb : I think that the jury would be out. I am not an expert. I do not claim to be an expert in this area. But when I see the numbers increase and coincident with a change in policy, then you would hope the policy has had some effect on the impact.
Senator BUSHBY: I am sure though that a policy like that would have to have some impact. It is just whether it is the best use of available funds in terms of trying to deliver the outcomes that we all like to see, I guess is the question. I do note that you did not include that in your list of measures to address.
Prof. Chubb : No, I did not include that.
Senator BUSHBY: Correct me if I am wrong, the conclusion I draw from that is that you think there are measures that should be taken and that is not in the top list of your priorities of where you would actually choose to go?
Prof. Chubb : It certainly is not on the top of my list; that is true. I think that we have to take a much more holistic view of it. It might well be a factor that you would come to once you have looked at how the whole begins to work rather than just a particular part of it.
Senator BUSHBY: Thank you.
CHAIR: Thank you very much, Professor Chubb, for your efforts here.
Prof. Chubb : Thank you, Chair.
CHAIR: I think this will be your second to last one.
Prof. Chubb : It could be my second to last one. I do not know what I will do!
CHAIR: No, you will be devastated; I am sure! Thank you very much for coming along, and thank you to the people that you brought. We will bid you good afternoon. Thank you very much.
CHAIR: I call program 1: Science awareness, infrastructure and international engagement; and Business research, development and commercialisation.
Ms Beauchamp : Can we just put some other things on the record that we were asked earlier?
CHAIR: Yes, Ms Beauchamp, go ahead.
Ms Weston : Senator Whish-Wilson asked a question about whether the Tasmanian Major Projects Approval Agency is assisting a project to establish a third telecommunications cable in Tasmania. The answer to the question is no, it is not assisting, but I am able to provide and will table for the committee the list of projects that have been engaged with by that Tasmanian projects approval office.
CHAIR: Thank you very much.
Senator BUSHBY: I would be interested in that as well.
CHAIR: Last week, all the CRCs were in town, Minister. They had their annual hubbub, which is always very interesting. You get along and you see what is exciting and what is happening. I note that the government is investing more than $731 million, I think, over the next five years, as preceding governments have, and it has been very supportive. I am, frankly, very excited by what is going on in this space. Minister, are you able to give me a bit of an understanding of what happened in the recent review of CRCs?
Senator Ronaldson: As a result of the reviews, the 2015-16 budget is investing about $731 million over five years. I think it is interesting to note that since 1991 the nation has invested more than $4 billion in funding the CRC Program. There was a review by Mr David Miles. I think that in the 25 years since it started there have been about 209 CRCs. There are of course reviews, I think, approximately every four or five years in relation to it. There were 18 recommendations, which were all accepted by the government.
I note that there was an announcement on 26 May by the minister headed '$74M boost for minerals processing and manufacturing CRCs', which said:
The established CRC for Optimising Resource Extraction (CRC ORE) will receive $34.45 million …
The new CRC for Innovative Manufacturing (IM CRC) will receive $40 million over seven years …
Senator Carr put out a press release on 13 May indicating:
The $27 million cut to the Cooperative Research Centres (CRC) program is particularly concerning.
This sounds the death knell for new funding rounds and pulls the rug out from under the Innovative Manufacturing CRC and the CRC for Optimising Resource Extraction …
There was no death knell, no rug being pulled out, but rather $74 million to go towards the important work of these CRCs.
Senator KIM CARR: Why did the government cut the funding—
Senator BUSHBY: To pay back some of the debt you accumulated.
Senator KIM CARR: Sorry? What is the reason?
CHAIR: How will that align with other measures that are in the industry space, Minister? I will give you the call, Senator Carr.
Senator Ronaldson: Sorry, what was the question?
CHAIR: I was interested in what you just said about the new CRC ORE—optimising resource extraction—and the innovative manufacturing CRC. They are obviously new initiatives, and I will put in a plug for my favourite CRC, or the one I am close to, the CRC CARE. Obviously those CRCs will align with other measures in the industry space.
Senator Ronaldson: They will be aligning with the industry growth centres, which are absolutely pivotal. I will get Mr Hoffman to expand on that aspect of it.
Mr Hoffman : There is a key point that has come out of the Miles review, and that is the closer integration of the programs that are in the industry and science department. The five industry growth centres that have been established are setting a strategy and facilitating collaboration in their respective sectors. A lot of the heavy lifting work is going to be done through the CRC program. The great majority of the current CRCs line up very well with those five growth sectors and they will be encouraged, where relevant, to enter into MOUs with the growth centres to ensure alignment of activity and research.
The two new ones directly line up with growth centres: the CRC Optimising Resource Extraction with the METS—the Mining Equipment, Technology and Services Growth Centre—and the Advanced Manufacturing CRC, quite obviously, with the Advanced Manufacturing Growth Centre. So I think it is an important point that, rather than having programs operating independently, they are being linked up within the priority sectors of the economy.
CHAIR: How would you think that you are getting the most value for money with respect to spending in the science and research infrastructure area?
Mr Hoffman : I think it builds on some of the comments that the Chief Scientist made earlier, and that is that the government has now put in place a set of national science and research priorities. This is a way of getting, as it were, the best value or the best return from the investment that is made by lining them up on some national priorities and challenges and then seeing that flow through from the science sector into the economy itself with the identification of the growth sectors. It is really drawing it all the way through from science into industry and vice versa.
Senator Ronaldson: I think it should be pointed out that the money taken from the CRCs was effectively an intra-portfolio transfer. The money that came out of that program went to ANSTO to enable the repat of the low-level nuclear waste that we talked about at some length yesterday.
I think it is also important to note that it was drawn from underspent funds and no existing programs will be affected. It represents less than about four per cent of the total funding for this year and the forward estimates. It is not the first time money has been removed from this program. Senator Carr himself took $40.5 million from the program in the 2011 budget, so there is certainly precedent for some movement of the funds.
CHAIR: I think I will move on, Minister, to my final question. The government accepted a recommendation in the Miles review to discontinue the public good test for CRCs. Why was that?
Ms Beauchamp : I think there was a view that all the CRCs provide public good. When we are looking at commercialising research and making sure the CRCs are connected to the economy, industry and the like, I think there was not a need for such a definition. But I might let Ms Urquhart or Mr Hoffman expand on that.
Mr Hoffman : It is important to note that the recommendation that was made was not that the current public good CRCs be discontinued—and there is no suggestion that that will be done. Rather, recommendation 16 of the Miles review was that the priority public good funding mechanism itself should be discontinued. So that is about potential future rounds and future applications et cetera. The minister has also said that that does not necessarily mean that there will not be a future one, but the approach and emphasis is very much on this being an industry related program and one that lines up with the growth sectors. That is where the priority focus for future rounds will be placed.
Senator Ronaldson: The thrust of the Miles review was to align the program closer with industry. Will there be public good coming out of that closer alignment? Yes, of course there will. But what Mr Hoffman said was the result of the recommendation.
Senator KIM CARR: Let's start with that. I restored public good to the CRC program in 2007, and I will be restoring it again if we get the opportunity in government. The decision to withdraw public good was essentially an ideological one, wasn't it? It was in the previous term of a conservative government and it is in this term. Is that not the case?
CHAIR: I don't think—
Senator Ronaldson: That was a comment. Most certainly, even if there was a question, which there was not, this officer could not answer that. But I take it from Senator Carr's comments that he does not agree with the closer alignment of the program with industry—
Senator KIM CARR: No, it is just—
Senator Ronaldson: which I think is disappointing. We certainly strongly endorse the Miles review in that regard.
Senator KIM CARR: What was the cost of moving the CRC program administrative unit from Industry House to the Nishi building and back again in the space of 12 months?
Ms Beauchamp : Those sorts of costs were involved in machinery-of-government changes. As I mentioned, the vocational education and training officers are moving out of accommodation that we are leasing. So we are looking at not just the CRC unit but other units in consolidating all of our functions in Industry House, which will in fact save us money in the longer term.
Senator KIM CARR: So what was the cost of moving the CRC unit from Industry House to the Nishi building and back again?
Ms Beauchamp : I would have to take the actual logistical costs on notice, because it is not just the CRC unit. There are other functions being moved as well, so they would be included in those types of moves. But can I just reiterate that, in the longer term, consolidating in one building is actually saving us a lot in leasing costs.
Mr Hoffman : If I could just add that, if we are talking about the same group of people, as I think we are, they have not in fact moved back from Nishi. The CRC administrative unit, as part of AusIndustry, currently works out of the Nishi building.
Senator KIM CARR: Can you explain why there was such a delay in announcing the innovative manufacturing CRC and the CRC for ORE?
Mr Hoffman : Without necessarily accepting that there was such a delay, I would say that the minister made it very clear that he would be waiting until he had received the Miles review and considered that government had come to a decision about the recommendations prior to making announcements and decisions about future CRCs.
Senator KIM CARR: What was the date on which the CRC for innovative manufacturing was approved by the CRC committee?
Mr Stirling : The CRC committee does not make decisions.
Senator KIM CARR: No, but it recommended. Technically, they are ministerial decisions.
Senator Ronaldson: You cannot ask when they made the decision. You have just been told they did not make the decision.
Senator KIM CARR: What was the date on which it was considered and agreed by the CRC committee for recommendation to the minister?
Mr Stirling : There are a couple of dates here. On 2 June 2014, a proposal for the innovative manufacturing CRC was submitted. The proposal was subsequently assessed by the CRC Committee and subject matter experts. The CRC Committee subsequently recommended to the minister that the application was suitable for funding.
Senator KIM CARR: What date was that?
Mr Stirling : I do not actually have that date on me. I can take that on notice. The decision in relation to whether or not the minister would fund that CRC was not made until post the CRC review being finalised.
Senator KIM CARR: I understand that. I would like to know the date on which the committee made the decision to recommend it and I would like to know the date on which that decision was transmitted to the minister's office.
Ms Beauchamp : We will take that on notice; but, as Mr Hoffman mentioned—
Senator KIM CARR: And then how long—
Senator Ronaldson: Please let the secretary finish.
Mr Stirling : the minister wanted to consider that CRC in the context of the Miles report, which commenced about September last year. Whilst David Miles was undertaking his report, it was considered to wait for the outcomes of those recommendations before making any determinations.
Senator Ronaldson: The minister made it very clear that he was waiting for the outcome of the review before he made any further decisions. It was terrific news that they were funded on 26 March.
Senator KIM CARR: And what was the process with the CRC ORE?
Mr Stirling : That CRC applied for funding extension through round 17. That application process closed on 3 July 2014. At stage 1 the CRC Committee recommended to the minister that that application was suitable for progressing to stage 2. The minister subsequently agreed with that recommendation. On 21 November 2014, the CRC Committee interviewed CRC ORE and subsequently recommended that the CRC was very suitable for funding. On 17 December 2014, CRC ORE was informed by the minister that final funding outcomes were expected to be announced following the completion of the CRC program review and subsequent consideration of those recommendations. It was announced on 26 May 2015.
Senator KIM CARR: If I look at the cuts to the CRC program 2015-16, there is an extract from the spreadsheet provided, for which I do thank you. This is the spreadsheet on committed funding.
Senator Ronaldson: Could you indicate again which spreadsheet so that officials can—
Senator KIM CARR: The spreadsheet the department has provided me.
Ms Beauchamp : Is that from the last question on notice?
Senator KIM CARR: Yes. I do not have—
Senator Ronaldson: Do you know if it was a question on notice response?
Senator KIM CARR: It is an attachment.
Mr Hoffman : What is the heading of the spreadsheet?
Senator KIM CARR: It does not have a heading. It is a spreadsheet of all uncommitted funding in the department.
Ms Beauchamp : I am not too sure what the exact date was. As I have said in the past, when you are looking at committed and uncommitted, it changes from day to day.
Senator KIM CARR: I will put the question to you, and tell me whether or not you can give me an answer. The way I read the spreadsheet, of committed funding, the latest cut consumes all uncommitted funding for 2015-16 and 2016-17 and half of the remaining funding for 2017-18. Is that correct?
Mr Hoffman : That is not my understanding, no.
Senator KIM CARR: Why is that?
Mr Hoffman : My understanding is that the total administered funding in the 2015 PBS in 2015-16 is about $147 million with currently contracted commitments of about $132 million, thereby allowing sufficient funding for the two new CRCs, although their exact year-by-year profiles have not been established yet. There is a small amount of further uncommitted funds after that for 2015-16. Similarly, after the current contracted commitments in 2016-17, which is $141 million in the PBS in total and $118 million in currently contracted commitments, allowing for innovative manufacturing and ORE, there will be around $11 million to $12 million in uncommitted funds in 2016-17. I could keep going out for the further two out years of the forwards if you wish. That will be $20 million of uncommitted funds in 2017-18—
Senator KIM CARR: Okay, let me put it to you this way.
Senator Ronaldson: Please let the officer finish.
Mr Hoffman : and in 2018-19 $86 million of currently uncommitted funds.
Senator KIM CARR: The way I read it, of uncommitted funding in 2015-16 there is a surplus of $1.102 million from the budget cut of $1.6 million.
Ms Beauchamp : Can I reiterate that that was as at a particular date. These are now the figures that have been updated. Mr Hoffman has just gone through those that are in the portfolio budget statements.
Senator KIM CARR: I have read from the same table. There is $141 million committed in 2016-17. Is that correct?
Mr Hoffman : Yes—no. There is $118 million committed in 2016-17.
Senator KIM CARR: The figure I have here says $141 million. Are you saying that is not correct?
Mr Hoffman : Sorry, the total administered is $141 million.
Senator KIM CARR: That is right. And you are taking a budget cut of $5.7 million for that. Is that correct?
Mr Hoffman : Yes.
Senator KIM CARR: But the uncommitted funding available is 5.73 million. Is that correct?
Mr Hoffman : No.
Senator KIM CARR: Why not?
Mr Hoffman : Because, as I explained, there is $141 as you said. Currently contracted commitments are $118½ million. Allow $11½ million, give or take, for the two new ones—as I said, the exact profiles have not been contracted with them yet, but allow for that. That still leaves around $11 million of uncommitted funds in 2016-17.
Senator KIM CARR: How much is committed in 2017-18?
Mr Hoffman : Currently contracted commitments of $97 million, allowing, say, $12½ million for the two new ones, allows $20 million of uncommitted funds for 2017-18.
Senator KIM CARR: The budget cut for that year is $7 million.
Mr Hoffman : That is right—$7 million. The reduction from this program is reallocated, as the minister previously said.
Senator KIM CARR: So what money is available for a future funding round for the CRC program?
Mr Hoffman : I think the money that is available for future funding rounds will be those uncommitted amounts that I have outlined.
Senator KIM CARR: To be clear about that: how much is left for uncommitted funds for a future round of the CRC program?
Mr Hoffman : There is $7½ million in 2015-16, $11½ million in 2016-17, $20½ million in 2017-18 and $86 million in 2018-19.
Ms Beauchamp : That also depends on the funding profile of the two recently announced CRCs.
Mr Hoffman : Yes, give or take. I was rounding off a little. There is $125 million in total over the forward estimates.
Senator KIM CARR: How many CRCs are up for renewal?
Mr Hoffman : In which year?
Senator KIM CARR: For those years.
Mr Hoffman : A large number of them will be up for renewal at any point in time in those years. Of course, we have to take into account the Miles recommendation, which the government has accepted, that 10 years should be the maximum term of a CRC.
Mr Stirling : To give you some detail on that if it helps: in 2015-16 there are two CRCs that are due to finalise. At the end of 2016-17 there are a further five that are due to finish. At the end of 2017-18 there are a further six that are due to finish.
Senator KIM CARR: The tables I have worked from were in response to question on notice No. 63. When was that provided to the committee?
Senator Ronaldson: If you have it there, it will have the date on it. Sorry, but it is very difficult to answer this question without knowing when the question was lodged and when it was answered.
Senator KIM CARR: It was the last round, from my recollection. What date was it provided? The question I put to you, though, is that you are saying to me that those answers you provided were incorrect.
Ms Beauchamp : No, I think I have mentioned a couple of times that the commitments change from day to day. Without that question on notice in front of me, I am not sure what the as at date was. Of course it would change after that date.
Senator Ronaldson: It was 2 March.
Senator KIM CARR: So it has changed in two months.
Mr Stirling : It changes every day.
Senator Ronaldson: It is three months, actually.
Senator KIM CARR: And the information you provided is effective as of when?
Ms Beauchamp : Budget night.
Senator KIM CARR: When will the next CRC funding round commence?
Mr Hoffman : The government has not decided that as yet. To add to that: on 26 May the minister stated at the CRC Association conference that he wanted first to have the CRCs reviewed as per the Miles review recommendations. This process will probably take the balance of the year, and the commitment to the 18th round will be after that.
Senator KIM CARR: What is the average amount provided to each CRC at the moment?
Mr Hoffman : I will take the exact number on notice, but roughly I think it is about $30 million or $40 million.
Mr Stirling : It is between $20 million and $40 million. It varies depending on the length of the CRC.
Senator KIM CARR: How much money is left?
Mr Hoffman : I said $126 million uncommitted over the forwards.
Senator KIM CARR: So you are saying you can fund three CRCs?
Ms Beauchamp : This is looking at the time frame Mr Hoffman has provided over the forward estimates. As has been indicated, some of these projects go way beyond the forward estimates.
Senator KIM CARR: Sure; but, if there is $120 million and the average is $40 million—
Mr Stirling : It is $40 million over the life of a CRC as opposed to over the forward estimates.
Senator KIM CARR: All right. So how many can you fund on $120 million?
Senator Ronaldson: That is completely hypothetical.
Mr Hoffman : You also have to remember that one of the recommendations that has been widely taken up as a positive thing is the introduction of CRCPs, or CRC projects, which will be smaller and shorter amounts as well and so not necessarily the $20 million to $40 million that Mr Stirling mentioned. It does become quite a complex calculation based on a set of assumptions as to the mix of CRCPs as opposed to new full CRCs, as it were, the timing that they occur over the forward estimates and so on.
Senator Ronaldson: And requested funds and a whole range of possibilities, which means it is impossible to answer that question and nor should it be extrapolated.
Senator KIM CARR: Madam Secretary, can you take on notice to give us an explanation as to how the committed funds have gone down in the period from March through to budget night as outlined in question number 63? Could you give us an explanation of how that happens—how the committed funds goes down in each of the budget lines?
Ms Beauchamp : As an initial answer: obviously that would depend on the funding profile of each of the CRCs. Looking at it just from year to year would not give you a good indication of the funding profile of a CRC that is going for 10 years. But, yes, I will take that on notice.
Senator KIM CARR: Thank you. How will the CRC for northern Australia be funded?
Ms Beauchamp : That is a decision for government.
Senator KIM CARR: But it is not part of this process, is it?
Ms Beauchamp : That is a decision for government that will be taken up in the context of the consideration of the northern Australia white paper.
Senator KIM CARR: So it is possible that the amount of money that is available would be used to fund that CRC.
Senator Ronaldson: That is purely hypothetical, and we are not going to respond to hypothetical questions like that. The secretary, as I recall, has said what the process is for the consideration of that. Otherwise, it is a matter for government, and we cannot answer that question any further.
Senator KIM CARR: What other funding arrangements are there for CRCs at the moment?
Ms Beauchamp : It is an ongoing program. We have identified the amount of funds that have been allocated by government to the program over the period of the forward estimates, which is in the order of over $700 million. Just acknowledging it is an ongoing program, and, of course, when government makes decisions about budget considerations—budget in confidence, cabinet in confidence—they are decisions for government in terms of the source of funds.
Senator KIM CARR: Has the department been in contact with the growNORTH proponents since the CRC review was finalised?
Ms Beauchamp : I would have to ask and take that on notice.
Senator KIM CARR: What was the nature of the engagement with growNORTH?
Senator Ronaldson: It has been taken on notice.
Ms Beauchamp : Since the Miles report?
Senator KIM CARR: Yes.
Ms Beauchamp : Again, I will take that on notice.
Senator KIM CARR: In March of this year the minister wrote to his colleague Mr Entsch saying that there was no program available that could fund growNORTH and pointed to the Miles review. What contact has been made with the CRC committee or the minister in regard to growNORTH since that time?
Senator Ronaldson: Do you have a copy of that letter, senator?
Senator KIM CARR: Have a look at that. But you can confirm whether or not the minister wrote it, can you not?
CHAIR: I am sure he writes a lot of letters.
Senator KIM CARR: Are you suggesting it is not true and that he did not write it?
CHAIR: No. The minister writes a lot of letters. It would just be good to have a look at it.
Senator Ronaldson: You are quoting from a letter. We want a response on the letter. But I will need to see the letter.
Senator KIM CARR: I have got a copy of the letter here, dated 23 March.
Senator Ronaldson: Can you table it?
Senator KIM CARR: It says:
Thank you for your letter …
CHAIR: Are you prepared to table it?
Senator KIM CARR: No, I just want to read it first. I am just going to read it into the record:
Thank you for the letter of 5 March concerning the funding options for growNORTH collaborative research and development program.
There is presently no program money available that growNORTH proponents can seek funding under. As you have noted, a review of the CRC is being conducted by David Miles. Mr Miles is finalising his report to the Australian government, which is expected to deliver it in the coming months.
growNORTH proponents may be interested in the Industry Growth Centres Initiative, which is a key element of the government's new industry program—
and so on, and then five programs—
Growth centres will be working with key stakeholders interested in actively contributing to the development and operations of each centre.
I am interested to know what further contact there has been. You have got ministerial correspondence at your disposal for 23 March 2015. Thank you. I have questions now on the R&D tax incentive program.
Ms Beauchamp : I will just ask the R&D team to come forward.
CHAIR: Are you done with the CRC people?
Senator KIM CARR: Yes, I am.
CHAIR: We have no further questions of the officers related to CRC. Thank you.
Senator KIM CARR: Can you give an update on how the R&D tax incentive program is working.
Mr D Wilson : Certainly. In terms of registrations, for the 2013-14 income year at 30 April we had had 11,362 registrations. That is an incomplete year for 2013-14. We would expect registrations through to the end of October for late balances.
Senator KIM CARR: Are you able to provide me with the terms of the claims—not the detail of individual claims but, in terms of your analysis of claims, the breakdown of each sector? My memory is that manufacturing was about 35 per cent and that scientific and other services were much smaller. There was a list provided that I have seen in the past. Do you have one of those contemporary lists that you could provide on notice?
Mr D Wilson : Certainly. I can give you some of those figures now.
Senator KIM CARR: I want a document on those things. Have there been any significant changes in recent years?
Mr D Wilson : Not that I—
Senator KIM CARR: The proportions have remained static. Is that right?
Mr D Wilson : We will take it on notice, but there is always some slight adjustment up and down between sectors.
Senator KIM CARR: Of course. But it is basically consistent in the last few years. What is the total amount of moneys claimed under the R&D tax concession, and what is the growth rate in the claims?
Mr D Wilson : As I mentioned, for 2013-14 that is still incomplete—the figure I gave you before in terms of registrations. The expenditure claimed is $14.94 billion for that incomplete year. For the 2012-13 year, which is complete, we had 12,133 registrations and it was just over $20½ billion. On our estimates for this 2013-14 year we would say the number of companies registering is going up about eight to 10 per cent year on year, and the amount expenditure claimed looks to be probably on par, the same as last year.
Senator KIM CARR: What is the growth rate in claims?
Mr D Wilson : As I said, for number of companies I would say it is between about eight to 10 per cent year on year. For the actual registered dollars expenditure it is an incomplete year, but our estimates would be that it is probably going to be if not the same, then roughly about the same. So there has been no growth in the expenditure of R&D, but the number of companies has gone up.
Senator KIM CARR: Have you done any analysis on the impact of the introduction of the $100 million cap?
Mr D Wilson : In terms of analysis?
Senator KIM CARR: Yes.
Mr D Wilson : In regard to?
Senator KIM CARR: Introduction of the $100 million cap. What effect will that have? You have done no analysis?
Mr D Wilson : That is right.
Ms Urquhart : Fewer than 25 groups of companies are expected to be affected by that measure, with no currently eligible companies excluded from the program. That is my understanding.
Senator KIM CARR: If there are 25 groups of companies affected there must be an impact. Otherwise why do it?
Mr Hoffman : Ms Urquhart was just confirming the anticipated scale of the effect on the number of groups of companies filing as a tax group. The actual impact is difficult, if not impossible, to identify until you get to the end of the relevant tax year for which they would have been submitting.
Senator KIM CARR: Mr Hoffman, what is the current Treasury estimate for the impact of that measure?
Ms Beauchamp : You would have to ask the Treasury about that.
Senator KIM CARR: You must have that figure. I was disappointed that you were not in the Senate chamber, and I have no doubt that you have read the Hansard from that. But you must have the figure on what the projected impact of that measure was.
Ms Beauchamp : It is a question for the Treasury. It is revenue forgone, and it is calculated at the end of each financial year. You would either have to direct that question to the Department of the Treasury, or we can take it on notice and refer it to them.
Senator KIM CARR: I will put it on notice: what is the projected impact of the introduction of the $100 million cap?
Ms Anton : I am informed that we are seeking that figure from the Treasury, to confirm what we had understood at the time it was brought in.
Senator KIM CARR: You have taken it on notice. What do you think the projected impact of the reduction of the rate by 1.5 per cent would be?
Senator Ronaldson: I think these are more Treasury matters, I have to say. The actual financial implications are a matter for Treasury. They should be directed to Treasury.
Senator KIM CARR: It is a matter that is coming up before the parliament very shortly. Has the department any assessment of the effect of the 1.5 per cent reduction?
Mr Hoffman : In the budget papers we have the forward estimates of the budget cost of the R&D tax incentive measure. The first order is to do a straight, first order effect of changing by 1.5 per cent. That is a relatively simple arithmetic saving.
Senator KIM CARR: Refresh my memory. If it is so simple, what is it?
Mr Hoffman : It can be done relatively simply. I do not have that calculation to hand.
CHAIR: It is just maths.
Mr Hoffman : That is the point I was making. We have not done the second and third order effects at this stage. They are primarily a matter for Treasury, as the secretariat said.
Senator Ronaldson: We will take this all on notice. These are matters for Treasury, and we will take them on notice.
Senator KIM CARR: Has the department received any expressions of concern about changes in this policy?
Senator Ronaldson: From where?
Senator KIM CARR: From people who use it.
Ms Urquhart : I would have to take that on notice.
Senator Ronaldson: People like you, or users or who?
CHAIR: I am following the line of questioning, and I think it is the 25 groups of people or whatever, but if you could be more specific.
Senator KIM CARR: There are two questions. Have there been any expressions of concern in regard to the $100 million cap? The second area of concern is in regard to the 1.5 per cent reduction.
CHAIR: They have taken that on notice.
Senator KIM CARR: Have you had a chance to look at any of the submissions to the Senate inquiry into the innovation system in regard to this matter? Does the department monitor any of those submissions?
Mr Hoffman : Yes, we do.
Senator KIM CARR: So you would be aware that there have been a number of submissions received by that inquiry on this question: Innovation Australia, in regard to stability and certainty; KPMG, in regard to frequent changes to the R&D incentives and diminished confidence. Medicines Australia: change to the R&D tax incentive less than three years after it was implemented could harm Australia's reputation as a stable and predictable business environment. Michael Johnson Associates: seeking to change the incentive system would create more uncertainty. Having seen those submissions, do you do anything about that?
Mr Hoffman : The government has made a decision to introduce this measure; having done so, there is always a range of views that are put, but the government is proceeding with this measure in terms of its overall fiscal strategy.
Senator KIM CARR: In the explanatory memorandum of the Tax and Superannuation Laws Amendment (2015 Measures No. 3) Bill 2015, there is a statement that:
Targeted confidential consultation was undertaken on exposure draft legislation with affected stakeholder bodies. No concerns were raised during consultation.
Who undertook that consultation?
Senator Ronaldson: This is not an Industry bill. It is not an Industry EM. If you have got questions about who was consulted and who was not consulted, can I suggest that you go to the responsible portfolio? Industry is not. This is not any Industry—
Senator KIM CARR: The answer to the question presumably then is: it is not us; it is the Department of the Treasury. Is that the case? Did Treasury undertake the consultation?
Senator Ronaldson: No, no. That is not what I said at all. Good try, Senator. What I have said to you is: they are unable to answer these questions; they are matters for Treasury and you should direct your inquiries to Treasury.
Senator KIM CARR: If you are finding that question so difficult to answer, I will ask: has the department of industry undertaken any consultations in regard to charges to the R&D tax incentive, as outlined in the Tax and Superannuation Laws Amendment (2015 Measures No. 3) Bill 2015?
Senator Ronaldson: It took you four goes to get to something that—
Senator KIM CARR: It is the same question. You are being facile again.
Senator Ronaldson: No, no. This is your problem, you see.
Senator KIM CARR: It is the same question.
Senator Ronaldson: You do not start off well and then you have got to finish it off later on.
CHAIR: We have got a question.
Mr Hoffman : We have not undertaken targeted, formal consultations on this matter, as the minister has explained. That having been said, on both the policy and the program sides of the department, we are regularly engaged with users of the incentive and with consultants and advisers about the incentive, so we are informed and engaged. But we have not undertaken formal, targeted consultations on this particular measure.
Senator KIM CARR: Have you raised concerns that have been raised with you in regard to these measures with Treasury? AusIndustry is the group that actually has to administer this program.
Ms Urquhart : We took on notice whether concerns had been raised with us, because, in order to give you a complete answer, I would need to check. So, with what has occurred with those particular concerns—where and how they have been raised—I would need to take that on notice as well.
Senator Ronaldson: Chair, I do notice in relation to this that of course these matters were attempted to be addressed or were addressed by the former government, and in particular Treasurer Wayne Swan. Indeed, that press release said this change will affect fewer than 20 corporate clients and will ensure the support is better targeted at small to medium business. Of course, fewer than 25 groups or companies under the government's proposal are affected, so effectively the opposition is not supporting a measure that was going to affect the same number of people under their proposal.
Senator KIM CARR: It is a different measure.
Senator Ronaldson: Twenty-five or fewer—same outcomes—
Senator KIM CARR: Groups of companies.
Senator Ronaldson: but apparently it is now a different matter—probably because we propose it, I suspect. That will be the reason there.
Senator KIM CARR: No. It is a different measure. We have indicated we are not supporting it.
CHAIR: Senator Carr, if you have got some questions.
Senator KIM CARR: Perhaps you could tell me what percentage of claims of the aggregate amounts of deductions come from those 25 companies.
Senator Ronaldson: You are now voting against the very same policy that Treasurer Swan introduced.
Senator KIM CARR: You are wrong. It is not the same policy.
Senator Ronaldson: It is 25 to 20. You see, that is the trouble. It is always easy to attack and be negative, but we are talking about a policy—
Senator KIM CARR: It is not the same policy.
Senator Ronaldson: with the same outcomes. I am not entirely sure why the Labor Party is doing this, but anyway.
Senator KIM CARR: That is very good.
Senator Ronaldson: Others will judge them.
Senator KIM CARR: I am glad it is not your responsibility to worry about what the Labor Party is doing.
Senator Ronaldson: And fortunately we no longer have to worry about you running this portfolio.
CHAIR: It is 10 to three. We have got 55 minutes to go before our next break. I know it is getting a little bit testy. It is that time of the day.
Senator WILLIAMS: I think it's been very good!
CHAIR: It has been very good. If we could just pose the question, Senator Carr.
Senator KIM CARR: I am interested to know whether or not it is 24 or 25 groups, because I think there have been two figures used. I have seen estimates of 27 R&D performing entities. Which one is it?
Mr D Wilson : With regard to a question on notice from last estimates, AI-17, from AusIndustry, from registrations of companies under the 2012-13 year, there were 24 groups of companies in that year that registered more than $100 million of R&D expenditure. Only the head entity registers, so a head of a group companies; within that, those companies have a number of R&D entities that belong to that group, and that is the 127 figure.
Senator KIM CARR: I see.
Senator Ronaldson: The original bill, the ITAA targeting measure, excluded companies with a value of assessable income exceeding $20 billion, and it was expected to provide a gain to revenue of $1.1 billion over the forward estimates and affect less than 20 companies. The introduction of $100 million caps secures an improvement to the budget bottom line broadly equivalent to that of the original proposal. So, you know, honestly and truly!
CHAIR: You were asked about the numbers of companies.
Senator KIM CARR: I have got an answer from the officer but not from the minister.
CHAIR: Next question.
Senator KIM CARR: The innovation board has looked at the effect of the measures on the supply chain. In response to AI—
Senator Ronaldson: Senator, we did not hear the start of the question.
Senator KIM CARR: At the last hearing, I asked whether the innovation board had asked about the effects of the measures on the R&D supply chain. In response to AI-20, it says:
Yes, the Board … has considered the impact on the supply chain of proposed changes to the R&D Tax incentive.
Another response to question A1-19 says:
… the measures were discussed at many meetings—
of the innovation board—
... during 2014 and 2015.
Would you be able to outline to the committee the findings of the innovation board's consideration and the R&D Incentives Committee's with regard to the changes to the R&D tax incentive and the impact on the supply chain.
Mr Hoffman : I think the best answer would be, as you mentioned before, that they had put a submission in to the public processes, and that is the record of their considerations and views.
Senator KIM CARR: So you have got nothing further to add from their submission?
Mr Hoffman : I think their submission stands on it own.
Senator KIM CARR: When did the innovation board consider the $100 million cap?
Mr Hoffman : That is one that we will have to take on notice.
Senator KIM CARR: What was the result of their deliberations? I do not recall there was a submission on that.
Mr Hoffman : I do not recall it either. I can check but from memory—and you may well know better than I—it was a matter that was being worked on within the parliamentary process itself.
Senator KIM CARR: In fact, it is a different measure. It is a separate measure.
Mr Hoffman : The point I was making was around the activity of the Innovation Australia Board.
Senator KIM CARR: At the previous estimates, Mr Lewis assured me that there would be an update, advice and guidance available for companies on the changes to the R&D tax inventive available before the end of the financial year. Is that available?
Mr D Wilson : We have draft guidance that has been prepared with regard to the impact on the affected companies. That draft guidance was provided on 25 May to our national reference group, which has a range of peak body stakeholders for the program, for their comment. So we expect to have that finalised in the next week or so, and it will be published on our and the ATO's website.
Senator KIM CARR: You would be aware that I raised the advanced findings facility in the chamber as well. In the last estimates we had quite a substantial discussion on advanced findings and the introduction of retrospective changes to the program—that is, for the $100 million cap. Do you recall those discussions?
Mr D Wilson : I was absent from the last estimates. Mr Lewis was acting in my position at the time. He did—
Senator KIM CARR: Ms Anton was here, was she not?
Ms Anton : I was here.
Senator KIM CARR: I think you told me that there were 94 advanced finding applications over the life of the program?
Ms Anton : Yes. That was question on notice AI-16. There were 94 advanced findings.
Senator KIM CARR: I wonder if you could clarify something for me. In relation to the advanced findings—that is, in response to question number AI-63, the program cost sheets the department has provided—I asked for a breakdown on the number of firms that have sought preapprovals or advanced confirmation for this and future years. The spreadsheet indicates there were 193 cases of advanced confirmation in 2012-13; 241 in 2013-14; 213 cases in 2014-15. That is a total of 647. What is the difference between the 94 advanced findings and the 647 advanced confirmations? Can you explain the difference between those two figures for me.
Mr D Wilson : Yes I can. In the question on notice AI-63, the spreadsheet you refer to includes the findings relating to overseas findings. For an overseas finding, a company must apply in their income year for a finding on their activities that they want to claim expenditure on for activities undertaken overseas. For each of those overseas findings, they must meet a number of conditions. The first condition is around the eligibility of the R&D, as well as then other conditions they meet. As the numbers point out, there has been around 500 of those overseas findings. Then there has been, as per question on notice 16, which lists the number of advanced findings, those which are specific and only relate to eligibility of R&D.
Senator KIM CARR: How many of those advanced confirmations involved expenditure or companies with expenditure over $100 million?
Mr D Wilson : I do not have that in front of me. I will have to take it on notice.
Ms Anton : I would note that we have to be careful where it might identify an individual company.
Senator KIM CARR: But we do know there are 25 of them. You are not telling me which ones.
Ms Anton : In a Venn diagram, you might have an intersection between advanced findings that are public and the companies—
Senator KIM CARR: I understand what the legislative restrictions are on the program. The nub of the question I am trying to get to here is: what happens if you have given a preapproval and it involves an expenditure in excess of $100 million? Does the retrospectivity of the legislation that has been carried impact on that preapproval?
Mr D Wilson : I understand from my review of the Hansard from last time of my manager Mr Lewis that he explained that the advanced finding really relates to a decision by Innovation Australia regarding the eligibility of the R&D. It does not go to how much expenditure is associated with that R&D. The responsibility of Innovation Australia is to make a determination around: is this eligible according to the definition in the legislation? And the advanced finding pertains to those activities. It does not go to: what is the associated expenditure with those activities?
Senator KIM CARR: So what happens if you give the approval and the company has spent more than $100 million?
Ms Beauchamp : We would have to get that advice from Treasury in terms of how they are rolling out that new measure.
Senator KIM CARR: Can you take that on notice.
Ms Beauchamp : Yes, and we will refer it to the Treasury.
Senator Ronaldson: We will refer it to Treasury.
Senator KIM CARR: That concludes my questions on the R&D.
CHAIR: Does anybody else have any questions in there? If there are no further questions, anybody associated with the R&D can also lickety-split home. Thank you very much.
Senator KIM CARR: I have some pretty straightforward questions in regard of the Inspiring Australia program. How is it tracking?
Prof. Durant : The program is doing very well. It is now in its fourth year, having been re-funded in the last budget for a further four years. It is doing some very good work in the ongoing operations of Prime Minister's prizes for science and National Science Week. The recent Unlocking Australia's Potential grant round awarded 63 grants, a sum of $5 million, and achieved a significant amount of activity right across the country. Many of those projects are still underway, having achieved a measure of sustainability after the life of the grant. In all states but one, we have set up an ongoing funding agreement, jointly funded with the states and territories, to place an officer on the ground and to generate some funds that will allow for activities in each of those states and territories as part of the national framework.
Senator KIM CARR: A question has been raised regarding the number of relatively small programs to promote science awareness and engagement in both the Industry and Science and the Education and Training portfolios, in addition to Questacon and, of course, the Inspiring Australia program. Is there any coordination across the different departments with regard to science promotion programs?
Prof. Durant : The Inspiring Australia initiative has three mechanisms where it interacts with different sectors. We interact with the states governments through, CSTACI, Commonwealth, State and Territory Advisory Council on Innovation, and the officers who work to that get together and share information and ideas and network. We have one group that emerged from the Coordination Committee on Innovation, which in turn came from the CCST, the Coordination Committee on Science and Technology. With the change, I am fairly sure that will ultimately link back to the National Science, Technology and Research Council in some way—possibly as a working party, but that has to be decided. We interact with the Commonwealth agencies and the other departments through that mechanism. The third mechanism is the Science Sector Group, where we interact with officers from the academies, the Australian Science Media Centre and the Australian Science Communicators. All of those three groups are coming together between 22 June and 24 June in Sydney for a workshop to bring all of that coordination together insofar as one is able to do that.
Senator KIM CARR: You were working on a project out at the old Mint—a science museum project. Is that still operating?
Prof. Durant : Questacon were able to take possession of what used to be the Royal Australian Mint when we set up a Questacon technology learning centre. We were fortunate to secure some support from the Ian Potter Foundation, which, along with some government support, is now allowing us to run out a Smart Skills program, which is touring Australia, and allowing us to revisit some of the invention conventions that we used to run through the Backing Australia's Ability program a number of years ago. We recently completed the first regional tour of Smart Skills in Tasmania, where we toured 20 schools over a period and ran the regional Invention Convention in partnership with a number of entrepreneurs and industries from the local area. Twenty youngsters from the skills program came together for a three-day boot camp. The next program will be in Wollongong and then, later in the year, we will be in western Victoria.
Senator KIM CARR: What is actually in the old Mint building?
Prof. Durant : In the Mint building, upstairs we run our national programs. We run the Science Circus; we run our maths program—
Senator KIM CARR: Does it have office facilities?
Prof. Durant : In one-quarter of it. In another quarter we run our exhibition productions. Our concepts, our design, our graphic design and our travelling exhibition programs are all run from that part of the building. We then have 1½ levels of workshop, so we have our own manufacturing facility where we make our exhibits. In the remaining quarter, we have a public facility where we have our Maker Space and an Enterprising Australians exhibition, where we showcase some examples of Australian enterprise.
Senator KIM CARR: So the exhibition space is one-quarter of the building?
Prof. Durant : The exhibition space and the Maker Space is about one-quarter of that building.
Senator KIM CARR: How many people have used the building?
Prof. Durant : The public?
Senator KIM CARR: Visitations. I know Questacon has pretty substantial numbers.
Prof. Durant : The building and facility there are aimed at prolonged engagement activities—smaller throughput rather than the high volume that we get through Questacon. The students sit down and are with us for a couple of hours doing a workshop. It was always intended to host small groups of school students going through and spending half a day there, working intensely on design projects and learning some of the creativity and the process of manufacturing through the initial idea and the prototyping. Then they get the opportunity to experience some of the advanced manufacturing equipment that we have there—the laser cutters, the 3-D printers et cetera. Then the exhibition illustrates the process in the real world where individual entrepreneurs have taken that approach to develop particular ideas that they are now commercialising. So the numbers are low; they are thousands rather than hundreds of thousands.
Senator KIM CARR: What are the visitation rates at Questacon?
Prof. Durant : At the moment it is running at about 420,000. It depends whether you count babes in arms and people who drop in for a cup of coffee or to go into the shop. Last year I think there were about 404,000 paying customers.
Senator KIM CARR: How does that rate in the normal tourism rates that you get?
Prof. Durant : In terms of the visitor numbers we normally get, this year it is pretty much flatlining. It was up about two per cent about one month ago and it has been a little quieter this month, although today it is very busy. We have 1,111 school students in seven groups from, I think, every state represented around the table. So it depends—there are peaks and troughs, but overall our visitation is solid and going very well.
Senator KIM CARR: What is the current entrance fee?
Prof. Durant : The entrance fee is $17.50.
Senator KIM CARR: Per adult?
Prof. Durant : For a child. I think is about $20 for adults. Family membership is about $160, which, of course, is what we try to sell.
Senator KIM CARR: When was the last time that fees went up?
Prof. Durant : September 2012.
Senator KIM CARR: That was the last time?
Prof. Durant : Yes.
Senator KIM CARR: Thank you very much.
CHAIR: Are you done with Questacon?
Senator KIM CARR: Yes.
Proceedings suspended from 15:09 to 15:24
Senator KIM CARR: Mr Chesworth, at the last estimates we had quite a lengthy conversation about euthanasia and the Pharmaceutical Industry Working Group. Do you recall that conversation?
Mr Chesworth : I do recall the discussion.
Senator KIM CARR: In March, a month after that conversation, the Minister for Industry and Science confirmed that the government did intend to re-establish the group. Has the group been reinstated?
Mr Chesworth : PIWG has not been reinstated.
Senator KIM CARR: Why not?
Mr Chesworth : The minister and the Minister for Health, Minister Ley, have agreed to hold regular joint meetings with a range of industry stakeholders including the pharmaceutical industry but also industries including health technologies, chemicals and plastics, and food processing, because I think that covers the full gamut of cross-portfolio issues between Industry and Health.
Senator KIM CARR: So are they all going to meet in one room now? The drug companies are going to meet with the plastics companies, are they? Is that the idea?
Mr Chesworth : There are a range of interests between the two portfolios.
Senator KIM CARR: Portfolios, but I am concerned about the people on the other side of the table. What is the connection between the plastics industry and the pharmaceuticals industry?
Mr Chesworth : There would be quite a number of connections between plastics and chemicals and pharmaceuticals.
Senator KIM CARR: So tell me about this.
Mr Chesworth : For plastics, for example, blow-fill-seal technology is based on advanced plastics, and of course chemistry is the fundamental basis of pharmaceuticals.
Senator KIM CARR: Chemistry—that is the connection.
Mr Chesworth : The science of chemistry.
Senator KIM CARR: The whole point of the PIWG arrangement was that the ministers, the two departments and the officials of the two departments would talk to an industry about matters of their concern. I can understand why the government might establish separate groups for each of those industries, but how does it justify having one group?
Mr Chesworth : I think it is because they are all issues that the two portfolios have a significant interest in.
Senator KIM CARR: Like what? We can be facetious about this and say it is chemistry and science, but how could you have meaningful consultation with a group of people with such diversity?
Mr Chesworth : For example in relation to the food industry, which is going to be one of the industries that is part of this body, there are shared issues between the portfolios in relation to health and safety and regulation and also in relation to chemicals regulation. The industry department and the health department as well as Agriculture and a few others are carrying on some work that has been attempted for many years now in relation to reforming the environment for plastics and chemicals regulation in this country.
Senator KIM CARR: When did the minister decide that the previous announcement to re-establish the PIWG was going to be overturned?
Mr Chesworth : The minister has not announced that he would re-establish the previous PIWG.
Senator KIM CARR: At the end of last March, he did, didn't he?
Mr Chesworth : This is Health Industry Forum.
Senator KIM CARR: You are saying that the minister did not say that. PharmaDispatch,which reported this on 1 April 2015, was just wrong?
Mr Chesworth : I have not seen the PharmaDispatchof that date, so I am not sure if they have quoted the minister correctly.
Senator KIM CARR: It carries a report here that at a meeting of industry representatives in Sydney yesterday. At a meeting of health representatives in Sydney—this was reported on 1 April 2015 by PharmaDispatch:
Mr Macfarlane told yesterday's audience he hoped to convene the first meeting of the 'new PIWG' before June.
Mr Chesworth : I cannot actually respond to that; we have put something in answer to a question on notice which says:
The Department of Health and the Department of Industry and Science are setting up a forum for industry to raise issues that intersect with both portfolios. The Minister for Health, the Hon Sussan Ley MP, and the Minister for Industry and Science, the Hon Ian Macfarlane MP, will attend meetings of the new forum. Two meetings of the forum will be held each year to cover off industry and health issues (more broadly than the PIWG) and it will include representation from a range of industry sectors, including pharmaceuticals, medical devices, advanced manufacturing, and food.
Senator KIM CARR: And food? I see. What advice can you lend the committee on the PBS Access and Sustainable Package and, in particular, the savings of $6.6 billion in regard to the effect it will have on pharmaceutical companies?
Mr Chesworth : Medicines Australia has made strong representations about the impact that changes to the PBS will have. Of course, this is the responsibility of the Health portfolio, but these are issues of which we remain aware. It does relate to issues of reimbursement for drugs and it remains to be seen whether there is, I guess, a distinct and causal connection between issues of reimbursement and other issues, such as the amount of R&D spend in this country. I think it is probably worth noting that the downward pressure on PBS reimbursement is something that has been in place for many years now, particularly following on from intergenerational reports done up to a decade ago. Certainly, in previous iterations, the industry—and I do not wish to speak for the industry—has reluctantly agreed, on the grounds that it offers a line of sight and it allows them to plan for the future. But, on the R&D side, we are doing other work in that area. It is something in which the Industry portfolio has a bit more of a role to play both in relation to the R&D tax incentive and on regulation reform in areas such as clinical trials reform.
Senator KIM CARR: Mr Chesworth, you said that you are doing some work in the area of the impact on R&D—did I hear you correctly
Mr Chesworth : No, the department of industry, with a range of other portfolios, has been involved in the deliberations that relate to the Pharmaceutical Benefits Scheme, as we have in the past.
Senator KIM CARR: In terms of the $6.6 billion savings, has your analysis established the impact on the pharmaceutical industry with regard to R&D?
Mr Chesworth : We are of the view that it is actually too hard to say. We have had significant savings in the past, and it has been very difficult to draw a correlation between those past savings and any increase or decrease in the R&D spend. I recall, for example, in the late 2000s when Medicines Australia, in particular, were pressing us very hard on R&D. One of the reasons for that was that the Australian exchange rate was at $1.08 and $1.09. Actually, as far as I was aware, it did not have much to do with PBS reimbursement; it was the fact that at $1.08 or $1.09 Australia became a much more expensive place to undertake R&D activity such as clinical trials.
Senator KIM CARR: What impact will this new agreement have on clinical trials?
Mr Chesworth : I do not know. We are talking mainly about the originator companies here, because the pharmaceutical industry is not just the originators. The generics are taking a much more substantial role. As well as that, some of the originator companies that were once just originators are generic manufacturers too. So the waters are perhaps a bit muddy. In the past, I think, the companies themselves have tended to separate issues of reimbursement from issues of R&D.
Senator KIM CARR: Is this new body called the health and industry ministers forum?
Mr Chesworth : The health industries forum.
Senator KIM CARR: When is it going to meet?
Mr Chesworth : Fairly shortly. I do not have the date with me at the moment.
Senator KIM CARR: This year?
Mr Chesworth : Most certainly. I am sure it is in my diary in the next few weeks. If someone has the date handy I am sure they will pass it to me.
Senator KIM CARR: Will this be an all-in meeting involving the plastics industry and the food industry?
Mr Chesworth : That is what is intended.
Mr Lawrence : The process for the meeting is that stakeholders will be invited to register once a date has been determined, and a range of issues will be discussed at that meeting.
Senator KIM CARR: Will medical instruments be there? Will the textile people be there?
Mr Lawrence : That will be determined by the agenda.
Senator KIM CARR: I see. So you only go to a meeting if you are on the agenda—is that how it works?
Mr Chesworth : You mentioned the textiles—
Senator KIM CARR: Yes, textiles. Medical instruments are made out of textiles. Given that science and chemistry is the thread that runs through all of this, I thought you would want to make sure we get the—
Mr Chesworth : It is intended to be medical—
Senator KIM CARR: Not bandages? Health ministers are interested in bandages, I suppose.
Mr Chesworth : Medical devices can range from a tongue depressor to an MRI machine. So it is a very broad—
Senator KIM CARR: A tongue—
CHAIR: Okay. We all know a lot about it—a lot more than I do. Let us just get back to it.
Senator KIM CARR: So the people who will be attending will be determined by what is on the agenda? They will not register to attend? How does it work?
Mr Lawrence : Notification of the meeting will be sent to stakeholders and they will be—
Senator KIM CARR: Which ones?
Mr Lawrence : They will be from the various sectors that we have discussed. They will be invited to register.
Senator KIM CARR: How many plastics firms are there?
Mr Lawrence : I would have to take that on notice.
Mr Chesworth : I can confirm the date of meeting. It is 25 June.
Senator KIM CARR: Who is going to the meeting? We would hope the ministers would be going. I presume they would.
Mr Chesworth : Both ministers will be there, and presumably they will be supported by various officials and industry representatives.
Senator KIM CARR: Which companies will be invited?
Mr Chesworth : I am not sure of that at the moment.
Senator KIM CARR: Which sectors will be invited?
Mr Chesworth : Plastics, chemicals, pharmaceuticals, food and medical devices?
Senator KIM CARR: How many food companies do we have in Australia?
Mr Chesworth : I think I know where you are headed with this.
Senator KIM CARR: Yes.
Mr Chesworth : Not every food company is going to be able to fit in the room.
Senator KIM CARR: That is right.
Mr Chesworth : There may be the circumstance where representatives of the food industry would be able to be involved.
Senator KIM CARR: I see. So you will have a meeting that will go from the PBS through to food labelling, will it?
Mr Chesworth : One of the issues that was of concern with PIWG when it was in existence was that the meetings did tend to focus very heavily on PBS issues.
Senator KIM CARR: That is because you had the drug companies in the room. It is surprising that would happen, isn't it!
Mr Chesworth : Most certainly. That was an issue over which the industry department had very limited leverage because it fell well and truly within the remit of the health portfolio.
Senator KIM CARR: I recall these conversations, Mr Chesworth. My understanding was that the PBS did cover questions of industry policy, investment, innovation and employment.
Mr Chesworth : Certainly, historically it did and there were a number of programs, particularly in the 80s and 90s, such as Factor (f) and the pharmaceuticals partnership scheme. Each and every one of those came under a bit of a cloud for WTO reasons.
Senator KIM CARR: I do not think so. I do not think that is right at all.
Mr Chesworth : As a result, they came to an end. There was a group established as a subgroup to the expert body that approved the sale of drugs in Australia. The acronym escapes me at that moment. One of the many factors that they would take into account was essentially one of the industry issues. Medicines Australia were a member of that panel.
Senator KIM CARR: That is right. Thank you for that. I look forward to a report on this Melbourne Cup field—no, it would not be a Melbourne Cup field; it is probably more an MCG type crowd. That is where you will be holding it, will you—at the MCG?
Mr Chesworth : No. I think the venue will be determined.
Senator KIM CARR: Thank you very much. I would like to talk to you about the Manufacturing Transition Grants Program. The manufacturing transition grants were announced as an election commitment, weren't they?
Dr Byrne : They were announced as an election commitment by the government—yes.
Senator KIM CARR: They were announced in August 2013 and new applications were announced last week. Is that right?
Dr Byrne : There has been one round of the Manufacturing Transition Program. My colleague Ms Peterson might like to add to that. But, yes, the announcements have been made.
Ms Peterson : The announcement took place on 20 May.
Senator KIM CARR: Why did it take two years to get it up and running?
Ms Peterson : The program was announced, as we said, as an election commitment. Round 1 of the program opened in September 2014 and closed on 21 October. There was an industry led advisory committee that met on 16 February this year to assess the applications and to determine funding recommendations to be put forward to the minister. While the total quantum of funds available was sufficient, the recommended projects could not be put forward for approval to the minister until necessary changes have been made to the funding profile to accommodate the proposed milestone payments. Within the requirements of the financial framework, funding decisions must of course consider whether or not there are sufficient uncommitted funds across the year. We put in a movement of funds request that was made and approved by the Minister for Finance on 2 April as part of whole-of-government processes. The grants were approved shortly afterwards.
Dr Byrne : Perhaps I could add a comment because your question goes to timing. The program was announced as a measure over three years. The sorts of initiatives that are being progressed are large-scale. So the timing is actually appropriate within the context of what was announced by government—a three-year program.
Senator KIM CARR: On the successful projects and the assessment process, how many projects have been announced?
Dr Byrne : Nineteen.
Senator KIM CARR: Can you give me a breakdown of the projects in each state and territory?
Ms Peterson : Certainly. There are eight in New South Wales, six in Queensland, three in Victoria, one in South Australia and one in Western Australia. I will note that across a number of the projects there will be activity across a number of states, but what I have just described to you indicates where the majority of project activity will take place.
Senator KIM CARR: Why was there only one in South Australia?
Ms Peterson : It was a highly competitive program.
Senator KIM CARR: Highly. How many of the successful projects are actually in Liberal electorates?
Ms Peterson : I would have to take that on notice.
Senator KIM CARR: While you are there, can you give me a breakdown on which state and territory and which federal electorate each project is based in?
Ms Peterson : Certainly. Again, I will take that on notice.
Senator KIM CARR: What is the total value of the grants that have been allocated?
Ms Peterson : The amount is $48.1 million.
Senator KIM CARR: So it is a $50 million program?
Dr Byrne : Yes.
Senator KIM CARR: How many more rounds will there be?
Ms Peterson : That will be a decision of government, but I think it is highly unlikely given the small quantum of remaining funds.
Senator KIM CARR: So there is less than $2 million left. What does the administration cost?
Ms Peterson : We did not get any. The Department of Finance did not approve any departmental expenditure with this program.
Senator KIM CARR: So the $2 million might be helpful in that regard.
Ms Peterson : No, we cannot use administered funding for departmental costs.
Senator KIM CARR: The minister can approve transfer below a certain amount, can't he? So it will be used as an offset for something else, will it?
Ms Peterson : That would be a decision for the government.
Ms Beauchamp : I should also mention that in terms of the program, whilst it is $48 million provided by the government it has also leveraged another $200 million, I think.
Senator KIM CARR: I am aware of the sort of ratios that can be generated by these types of programs. I have an article here that I will table. While that is being copied and distributed I will move on to other issues. I understand that there is a review underway of the Disability (Access to Premises—Buildings) Standards 2010. Is that a departmental review?
Dr Byrne : Yes, it is a departmental review.
Senator KIM CARR: Can you give me an update on the status of that review?
Dr Byrne : This is a legislated review. It is a requirement of government that needed to start by 1 May 2015 and be concluded by 1 May 2016. Essentially, where we are up to in the process is that we have established a steering group. The requirement is that we consult with the Attorney-General. The terms of reference for the review were developed and agreed with the Attorney-General. We have established a steering committee, chaired by Mr Chesworth, from our department, with representatives of Attorney-General and the Department of Social Services. We have undertaken the development of a discussion paper that is being publicly released. We have undertaken information sessions in capital cities and in some regional centres to allow interested parties to find out more about the review and how they can make a submission. At this stage we have already received approximately 300 submissions. I think that is the latest figure that I checked, as of yesterday. Submissions need to be brought forward by 15 June 2015. After that we will examine the themes that emerge from the submissions, which are coming from a whole range of groups: members of the general public, disability advocates, industry groups and others. Then we will decide, using the steering group that is chaired by Mr Chesworth, as to whether or not we would undertake some additional more targeted and deeper discussion and consultations with the various stakeholders with a view to finalising a report for consideration by government within the agreed timeline.
Senator KIM CARR: When is that? When will it have to be concluded?
Dr Byrne : We are required to have the review completed by 1 May 2016, and at this stage we think our processes will allow us to complete it within the agreed time frame.
Senator KIM CARR: Are you running the consultation process, Mr Chesworth?
Mr Chesworth : No. I chair a steering group. Officers in Dr Byrne's branch are running that consultation process.
Senator KIM CARR: What opportunity will stakeholders have, Dr Byrne, to contribute to negotiations around any proposed changes to the premises standards?
Dr Byrne : If I could just clarify what the focus of the review is. When the original act was developed there was a need obviously to consult in a particular way to enable the act and the legislation to be brought forward. We actually have an act. But the purpose of this review is not to do an examination to see whether we should replace the act, but rather to ask the question as to whether the degree to which the act is appropriate and whether there are any opportunities to consider ways to enhance the premises standards. The specific terms of reference, which I could table, if that is helpful, are clear about what the review will and will not do. The review will consider the effectiveness of the premises standards in achieving their objects. The critical thing is that we have the standards and the question is one of whether they are fit for purpose and being used. Secondly, identify any necessary amendments and then look at the interaction between the standards and other activities.
The review is a legislative review, so the process is primarily a process within government. But as I mentioned, how we will test thinking with stakeholders is firstly by providing them with the opportunity to put in submissions, which we are doing, and then do an analysis of those submissions and determine what additional discussions we might have. But the actual decisions about how the standards may or may not be amended is a matter for government. That is how the review is being run.
Senator KIM CARR: I have had representations that the consultation period, which you have said closes on 15 June, is far too short. Will you be taking late submissions?
Dr Byrne : At this stage our advice is that we will not be taking late submissions. One of the reasons that needs to be the case is to ensure that we can meet the timelines. That said—Mr Chesworth might want to add or amend here—we are of course able to take into account additional information throughout the entire review process. So while we consider the date that we have given to be a sensible timeline for submissions, we are aware of these concerns. We have also been communicating with stakeholders about these concerns that the submission is an important part of our process. Until we can do that thematic analysis we will not know what potential recommendations there will be. But at any stage the department would welcome additional input, but it will not be in the form of that submission. It may be a supplementary input. It could be a conversation or a workshop with a range of stakeholders on a particular theme.
Senator KIM CARR: What is the technical advice that you reply upon to validate the claims that are made as to any proposed changes to the premises standards?
Dr Byrne : As I mentioned, we will be using our steering group mechanism and the people that we are consulting with, who include the states and territories, who are the technical experts; we believe we will have sufficient technical expertise available to us through the mechanisms in our consultation to ensure that any suggestions to amend the premises standards would be appropriate and fit for purpose. Certainly we think that we will be able to sensibly test the degree to which the premises standards should be amended and what the implications would be, including any regulation impacts. Just to repeat: this is a review of the Commonwealth in close consultation with Attorney-General's, who, of course, also have expertise and are responsible for the legislation. So I am confident that we will have sufficient technical expertise to guide us through the process, but I invite Mr Chesworth to add—
Senator KIM CARR: We will come back to that. You have seen the article I have distributed—the report from the Ranges Trader Mail. The article talks about a recent visit by the minister for industry and Jason Wood MP to a manufacturer in Gembrook, Mountain Harvest Foods. It talks about a next generation manufacturing grants program and a manufacturing transition grants program and goes on to say that Mountain Harvest Foods hopes to double their employment in 18 months with the support of these government initiatives. Has the firm been awarded a grant under either of these schemes, or any other Commonwealth scheme?
Dr Byrne : I might just make a comment while the minister or other colleagues are coming to the table: the Next Generation Manufacturing Investment Program, which is part of the growth fund, has opened an application round, but the applications are still being assessed. So, in the case of the Next Generation Manufacturing Investment Program, there was no decision of government in relation to any grants under that program. But for MTP I will pass to my colleague.
Ms Peterson : In relation to the manufacturing transition grants program, I cannot verify if this company was actually an applicant, but it is certainly not a successful recipient. But I can take on notice whether or not they made an application.
Senator KIM CARR: Thank you. If I remember correctly, the next generation manufacturing grants scheme was announced in December 2013. Is that right?
Dr Byrne : It was announced as part of the growth fund announcement of government, together with a range of other measures.
Senator KIM CARR: When do the application rounds close?
Dr Byrne : The application rounds closed on 9 January 2015—round 1. My colleague Ms Facey can correct anything I say if need be. Applications opened for round 1 of the Next Generation Manufacturing Investment Program on 16 October and closed on 9 January.
Senator KIM CARR: So they opened in October and they closed on 9 January, which is remarkably early in the year. We are now, of course, in June. How many projects have been announced?
Dr Byrne : No announcements have—sorry; go ahead.
Ms Butler : You are correct: round 1 did open on 16 October 2014 and did close on 9 January 2015. Interest has been very strong for this program, with a total of 265 applications received seeking $554 million in grants. Of those, 241 of those applications are considered to be eligible and we are going through an assessment process at the moment. Given the large volume of the applications that we have received, we are looking for a decision before the end of the financial year. It has been a very well-subscribed program, and it has resulted in us having to undertake a considerably large assessment within AusIndustry.
Senator KIM CARR: When do you anticipate the process of assessment will have concluded?
Ms Facey : As my colleague has explained, it has been a rigorous assessment process and we are currently in the process of appointing the advisory committee. We expect that they will begin their assessments at the end of this month and we are hoping to have announcements next month in July.
Senator KIM CARR: Are you saying the assessments have not started?
Ms Facey : No, the internal assessments within the department and in the two state governments have been ongoing since January. I was referring to the process of the advisory committee actually reading the assessments.
Senator KIM CARR: This is the 241 that you have decided are eligible?
Ms Facey : Yes, and of those one has now withdrawn.
Senator KIM CARR: So it is 240?
Ms Facey : Yes.
Senator KIM CARR: How much money is available?
Ms Facey : $60 million for the project.
Senator KIM CARR: So there is 240 applicants seeking $60 million. The total value of their applications would be in excess of $550 million. So there is quite a culling process.
Ms Facey : Indeed. And the actual amount that can be awarded as grants is $56.7 million because the remainder is used for departmental funding.
Senator KIM CARR: At least there is some departmental funding in this one. With both the manufacturing transition grants, which were announced recently, and the next generation manufacturing grants, who actually signs off on the grants?
Ms Butler : The process is that the advisory committees make recommendations and the minister is the decision maker.
Senator KIM CARR: Yes. So the minister does not have to accept the recommendations.
Ms Butler : The minister is the decision maker, correct. They are advisory committees who make recommendations to the minister.
Senator KIM CARR: At the moment, how many other grants programs in the department work that way—that is, where there is an advisory committee and a minister sign-off?
Ms Butler : One that I could say now would obviously be the Cooperative Research Centre's program minister.
Senator KIM CARR: The minister's discretion is substantially limited in the CRC program. If my recollection serves me correctly, the CRC program, in terms of the list that is provided, you can only rate within that list; you cannot actually put another one in. Is that the case?
Ms Butler : I will have to get the relevant officer back for that one. I would not like to mislead you around the process for that program.
Senator Ronaldson: Well take that on notice.
Ms Beauchamp : It is not an unusual process for the minister to have the responsibility and sign-off for Commonwealth funding as part of our budget.
Senator KIM CARR: I understand that; but the level of discretion here is a little unusual.
Senator LUDWIG: Could you take me through how it works, in that the advisory committee are comprised of who?
Ms Beauchamp : The advisory committee, which has not yet been formed, is usually an independent group that has knowledge of the industry, knowledge of the states and provide, in this case, advice to the minister.
Senator LUDWIG: And who appoints them?
Ms Beauchamp : I think the minister does in this case, in consultation with the states and territories.
Senator LUDWIG: So the minister appoints the advisory group that is then going to provide a short list to him or her.
Ms Beauchamp : Yes.
Senator LUDWIG: How many on the advisory committee?
Ms Beauchamp : That has not been decided.
Mr Chesworth : It is often customary four individuals to be on the advisory committee and it is also customary that one of those officials is an official from the department—an ex officio.
Senator LUDWIG: Do they vote in the committee? I assume they have got some skills about how you rank, assess and determine the criteria for the successful applicants. Do they then vote if they disagree on how it works?
Ms Beauchamp : I probably will not go through the internal machinations of how an advisory committee works, but normally they are supported by the department and are obviously supported with very robust program guidelines and selection criteria. As a department, we would have people who support that committee. So the committee brings that independent view and knowledge and perhaps other things into the mix that the department may not have thought of, but we go through and make sure they are eligible and meet the criteria, and then we provide advice to the advisory group.
Senator LUDWIG: Have the guidelines or the methodology used to assess been developed yet?
Ms Beauchamp : We normally have a set of program guidelines, yes.
Senator LUDWIG: Do you have that for this program?
Ms Beauchamp : I think it is probably on the website.
Senator LUDWIG: When you say 'probably'—
Ms Beauchamp : Yes. Sorry, Senator.
Senator LUDWIG: It is on the website?
Ms Beauchamp : It is on the website.
Senator LUDWIG: Is there any other supporting document the committee would use in assessing, or would they use only the program guidelines?
Ms Butler : We are talking about the Next Generation Manufacturing Investment Program, because we have moved between manufacturing and next generation. There is quite a significant amount of documentation. We have the ministerial guidelines, we have the Next Generation Manufacturing Investment Program guidelines, we have the customer guidelines, and then we also have a range of fact sheets and we have the funding agreement, all of which is available on business.gov.au. When you look at the guidelines for the program, they clearly indicate what the eligibility criteria are and they also indicate what the merit criteria are, and they indicate to the customer who applies for that program how their application will be judged against those eligibility and merit criteria. The department makes an assessment; we have customer service managers who make those assessments. Those assessments are then put to the advisory committee, who themselves go through a rigorous process of scoring and ranking, and they then put a recommendation to the minister.
Senator LUDWIG: Do they rank it to the minister? Has it been determined yet how they will advise the minister?
Ms Facey : It has not been determined as yet.
Senator LUDWIG: Do they determine the money allocation? If there is an application for X dollars, can the committee then say, 'We think it's meritorious, but only for X minus Y dollars'?
Ms Beauchamp : They do that.
Senator LUDWIG: Yes, they do that as well.
Senator Ronaldson: We really are getting off into the land of the hypotheticals, I would say.
Senator KIM CARR: It is not hypothetical.
Senator LUDWIG: It is helpful, though. Thank you, Minister.
Senator KIM CARR: Thank you very much for that. I turn to the Motor Vehicle Standards Act on parallel imports. Who in the department is dealing with that issue?
Mr Chesworth : Dr Richards's branch looks after the automotive industry. However, the issue of the Motor Vehicle Standards Act is the responsibility of the Department of Infrastructure and Regional Development.
Senator KIM CARR: Yes, I understand that. I have the right officers here, though?
Mr Chesworth : Yes.
Senator KIM CARR: Thank you. Is it Dr Richards? My apologies. Your logo needs to be changed.
Dr Richards : I have been demoted!
Senator KIM CARR: I believe that these titles should be correctly used. You are now responsible for the automotive program, are you?
Dr Richards : For the policy side of the program. The payment side is with AusIndustry, under the automotive transport industry.
Senator KIM CARR: The Assistant Minister for Infrastructure and Regional Development, Mr Briggs, has announced that the government is looking into relaxing the restrictions on the personal importation of new cars as part of the Motor Vehicle Standards Act review. I just want to know: what engagement has the department had with that review?
Dr Richards : The department was consulted on the development of that paper?
Senator KIM CARR: What was the form of consultation?
Dr Richards : Sorry, my entry into that position was at a late stage of the development of that. But there was an interdepartmental committee that I was part of in the late stages of that. I presume that had been running well before I joined.
Senator KIM CARR: So you were on the interdepartmental committee, were you?
Dr Richards : There was an interdepartmental committee formed, and officers from my branch were attending that?
Senator KIM CARR: Were you on the committee or was an officer from your division?
Dr Richards : The department was invited to the committee, and an officer from my group was attending.
Senator KIM CARR: Group?
Dr Richards : From my branch, to give the correct title.
Senator KIM CARR: So what input did you have to the definition of a new or a used car?
Dr Richards : None that I know of.
Senator KIM CARR: The assistant minister's announcement indicated that he will define a new car as one that has done 4,000 kilometres. Has that been the standard definition used in the automotive branch in recent years?
Dr Richards : It is not one that is prescribed anywhere, to my knowledge.
Senator KIM CARR: What would the branch say about that definition of a new car being one that has 4,000 kilometres on the clock?
Senator Ronaldson: The minister for infrastructure has made a decision in relation to this. That decision has been made and, quite frankly, the opinion of anyone—mine or anyone else's—is not relevant to this. The decision has been made and that is the decision. We cannot answer that for you.
CHAIR: Senator Carr, I would be interested in your view, but that is for another day.
Senator KIM CARR: I can tell you now: a new car is not one that has 4,000 kilometres on the clock. That would be a definition that would be new to the Australian motoring industry, would it not?
CHAIR: We could open up the estimates process to a debate on what is new and what is not—
Senator BUSHBY: A demonstration model.
Senator KIM CARR: But that is not a new car—that is the point.
CHAIR: When it has done one kilometre it is no longer new—how about that?
Senator KIM CARR: That is right—that is exactly the point.
CHAIR: Or is it sort of newish at 10,000 kilometres?
Senator KIM CARR: It is a second-hand car.
Senator LUDWIG: It is starting to look tired.
Senator KIM CARR: That is the point. In the Australian industry, has 4,000 kilometres been regarded as a new car?
Mr Chesworth : I think Dr Richards has answered that. You asked what engagement we have had, and Dr Richards mentioned engagement within government. The department has also engaged with the auto manufacturers and the FCAI, who have raised these issues.
Senator KIM CARR: What advice has FCAI provided to the parliament?
Mr Chesworth : I am reluctant to breach the confidence of what may have been a discussion, but if you go to the FCAI website—
Senator KIM CARR: FCAI have kept their views secret on this matter, have they?
Mr Chesworth : Well, you know, a meeting's a meeting, but certainly Mr Weber, accompanied by representatives of the major manufacturers, have indicated their concerns.
Senator KIM CARR: Very great concerns. I note the ACCC has put a statement on its website about the issue. It contains guidance to consumers when considering purchasing a parallel import. The ACCC has highlighted:
… it may be more difficult to obtain a remedy if something goes wrong with a parallel import.
… … …
of the parallel import—
cannot refuse to help you …
… … …
Although your products may carry a particular or popular brand name - if it is sold to you as a parallel import, the local manufacturer is not required to help you if the product develops a fault.
That is accurate, is it not?
Mr Chesworth : That is the ACCC's advice.
Senator KIM CARR: That is not the industry department's view?
Senator Ronaldson: Senator, you are seeking an opinion from an officer in relation to something said by the ACCC. As you would be well aware, that is just not appropriate.
Senator KIM CARR: Has the department produced any assessment of the parallel import proposals that are currently out for consultation?
Mr Chesworth : I cannot recall off the top of my head, but I suspect there would have been some advice provided to the minister.
Senator KIM CARR: There is a note being read by the chair that actually disqualifies that answer, but we will not press the point. I turn to country-of-origin labelling.
Senator LUDWIG: Before we go to that, still on that original ministerial discretion, if the minister does not want one on the list, is there a process to determine—
Senator KIM CARR: One of the tranches to the grants program.
Senator LUDWIG: Yes. If the minister does not want to choose one off the advisory list, is there a process—so it is not a hypothetical—to allow the minister to choose another one not on the advisory committee list?
Senator Ronaldson: I am not aware of what the minister has in mind for this, but I am happy to take it on notice.
Senator LUDWIG: No, it is a process question. Is there a process? You have got discretionary grant systems; you have got an advisory system. So you do know whether or not you have a process. The minister has 10 places; the advisory committee gives him enough to choose 10. He decides that he does not want any of them, or all but nine, and then chooses another program that was not put up by the advisory committee. Do they declare that, do they take it to the house and advise, or no-one knows unless I ask?
Ms Beauchamp : It is very unusual for it to occur, but there is a process to address that, yes.
Senator LUDWIG: What is the process?
Mr Hoffman : Given the minister is the decision maker, he or she has the ultimate decision to make. If, however, that decision is contrary to the advice provided by the advisory committee, the process requires public disclosure of that and informing the finance minister.
Senator LUDWIG: Is the public disclosure of that in legislation—the guideline, rule, ministerial direction? You are welcome to take that on notice.
Mr Hoffman : It is the Commonwealth Grant Guidelines.
Senator LUDWIG: Thank you.
Senator KIM CARR: What is happening with the review of country-of-origin labelling laws?
Mr Lawson : A series of consultations are proceeding at the moment. Ministerial level consultations occurred at the beginning of April. The industry department ran a series of industry workshops around the country in April and the beginning of May, including a webinar. People who were not able to go to particular events were able to go online. In terms of consumer consultation, we have hired a market research business through a panel process to run a series of focus groups, to run a quantitative survey, to also have one-on-one meetings with 20, if I remember correctly, small businesses, to get that sort of consultation process. We expect next week there will be an online survey made available for general members of the public who wish to have their say and respond to a series of questions on an online survey. That is the sort of consultation process that is going on. We are of course working through a cost-benefit analysis to support a regulation impact statement exercise, and it will all come to fruition in a cabinet submission that ministers have talked about happening in August.
Senator KIM CARR: So what is actually happening in August?
Mr Lawson : The ministers have been saying publicly that that is when they expect to take the decisions to government for the Commonwealth's decision on what it would like to suggest to the states. As you presumably know, the country-of-origin labelling is a matter where the Commonwealth works with the states. The food code and the consumer law are both things that are incorporated into state legislation. Each of the states have a majority vote on changing either of those pieces of legislation. Once the Commonwealth has decided its position a recommendation would go to the appropriate ministerial forum, and then they will then do their own COAG regulation impact statement process to come to a conclusion.
Senator KIM CARR: Is the department of industry the lead agency on country-of-origin labelling?
Mr Lawson : Yes.
Senator KIM CARR: I note that the agriculture minister has been on the record describing his preferences for diagrammatic labelling. Does the department have a view on what is the best form of county-of-origin labelling?
Mr Lawson : That is why we are going through the consultation process—to come to a conclusion. The research indicates that text and visual signals going together have a stronger impact on consumers. Of course, visual labels imply a cost, so it will be a matter for our processes to go through to look at those.
Senator KIM CARR: This is not the first time this matter has been raised.
Mr Lawson : Indeed. I think Minister Macfarlane has been on the public record saying this has been a problem for 30 years and he intends to fix it.
Senator KIM CARR: He intends to fix it! I like the glee with which you draw this to our attention. You can put that on his tombstone!
Senator LUDWIG: We are still waiting for the Toowoomba range crossing too!
Senator Ronaldson: I think it is important to put this chain of events into context. As we have said before, there have been business workshops in a number of locations to get feedback. Those stakeholders have been supportive of the changes and are providing constructive feedback on the policy. But some of the key insights, I am advised, from business on how these new food labels will work at an operational and practical level have helped to inform the market and consumer research, and the formal market research and the public survey will collect consumer sentiment. So the consultations have helped inform the market research; and the market research, I understand, will go into the market with different versions of a potential label.
Senator KIM CARR: You are informed?
Senator Ronaldson: You did nothing and we are doing something.
Senator KIM CARR: Is there a public expectation that there is an indication of food safety and quality associated with country-of-origin labelling?
Mr Lawson : As the Prime Minister said, the public have got a right to safe food no matter where it comes from. We think it is important to distinguish between the role of country-of-origin labelling—which is to provide information to consumers so that they can make a choice about the food they procure. There are a set of other arrangements, which are not the responsibility of this department, to ensure that all food that is made available for sale in Australia is safe.
Senator KIM CARR: Which other arrangements are you referring to?
Mr Lawson : The sorts of things that are done by the Department of Agriculture, the Department of Health, the state agencies that work in that area and immigration and customs—food safety arrangements, quarantine type arrangements.
Senator KIM CARR: That is quite a broad area of responsibility.
Mr Lawson : Yes.
Senator KIM CARR: Thank you very much. We look forward to a discussion of this at the next meeting, given that August is going to be the decision-making time. I would like to turn to anti-dumping matters.
CHAIR: Senator Xenophon has the call.
Senator KIM CARR: Chair, there is a standard pattern here!
CHAIR: We accommodate him because he sticks to his time.
Senator XENOPHON: I will be really quick—eight to 10 minutes. Senator Carr, if this is an area you are going to traverse, I am very happy for you to—
Senator KIM CARR: Let's have some collaboration on this.
CHAIR: You'll just do the media!
Senator KIM CARR: Exactly. I'll do your interview for you if you like!
Senator XENOPHON: Your cynicism knows no bounds! Where is the commissioner?
Ms Beauchamp : I apologise on behalf of Mr Seymour. We had thought our original committee hearing for Senate estimates was going to be on 1 and 2 June. He has committed to meeting with his international colleagues in Korea.
Senator XENOPHON: Hang on, estimates are separate from any committee meeting. This goes to—
Ms Beauchamp : He had organised and made commitments to speak at the international—
Senator XENOPHON: I see.
Ms Beauchamp : So my apologies, but I am sure we have got the relevant people here. We have got the acting commissioner here as well.
Senator XENOPHON: Last time, I referred to Olex Australia's allegations of the dumping of certain PVC flat electric cables exported from China. That is case No. 271, an investigation initiated under anti-dumping notice number 2014/118. I would like to talk about the trend within the commission to place verification visit reports on the public record only days before publishing a statement of the essential facts. Specifically, I refer to the Anti-Dumping Commission's investigation of Olex Australia's allegations of dumping. The commission issued a statement of essential facts, a SEF, in relation to the investigation on 25 May 2015 and the proposed recommendation to the minister was to terminate the investigation for negligible dumping. Is that correct?
Mr Sexton : That is correct. A statement of essential facts was placed on the public record on 25 May.
Senator XENOPHON: I understand that interested parties have only 20 days to respond to the statement of essential facts.
Mr Sexton : That is correct.
Senator XENOPHON: When did the officers of the Anti-Dumping Commission conclude their visit to allegedly the largest Chinese exporter of electrical cable to Australia, the Guilin Group in China?
Mr Sexton : I do not have a particular date in front of me.
Senator XENOPHON: I suggest it was 23 March 2015.
Mr Sexton : I cannot confirm that.
Senator Ronaldson: We will take that on notice.
Senator XENOPHON: I am just trying to help you, Minister, as always.
Mr Sexton : I am new to the commission—I have only been there seven weeks— so that sort of information I do not have in front of me.
Senator XENOPHON: I am not having a go at you. I am interested in some systemic issues that are very concerning. If you assume that the visit took place on 23 March 2015—I believe my information is quite reliable; and, if anyone wants to contradict it, feel free to chip in—
Senator Ronaldson: That is the trouble—I do not think we can. But let's see what happens anyway.
Senator XENOPHON: I am suggesting to you, Minister, that the date was 23 March 2015, when the officers concluded their visit. I understand that the officers placed a report of that visit on the public record on 25 May 2015, which is two months after concluding the visit and the same day the commission placed a statement of essential facts on the public record.
Mr Sexton : The information I have is that that visit report was placed on the public record on 15 May.
Senator XENOPHON: Can you take that on notice.
Mr Sexton : I can confirm that for you.
Senator XENOPHON: My understanding is that it was 25 May. Notwithstanding that, 15 May was still six weeks after the visit. On 25 February 2015 the commissioner recommended to the parliamentary secretary that the date for the publication of the statement of essential facts be extended by 90 days to give the exporters more time to supply information. Is that correct.
Mr Sexton : I believe that is correct.
Senator XENOPHON: So the exporter gets an extension and, even after that extension, your officers cannot even give the local Australian industry an opportunity to review what has become a critical report in advance of the statement of essential facts. I put it to you that that is completely unfair to Australian industry. In terms of procedural fairness, if the time lines I have put to you are correct, that is quite prejudicial to Australian industry, is it not?
Mr Sexton : There is a possibility that the commissioner can extend the time of 20 days for Olex to provide further information in this case.
Senator XENOPHON: The point is that there seems to be an unreasonable delay.
Mr Sexton : One of the issues about this case was that there seemed to be a relationship between the exporters and importers. Therefore, there was a fair amount of work needed to understand that relationship and understand the financial transactions between those two.
Senator XENOPHON: How? There appears to have been a visit to the Guilin Group in China on 23 March 2015. Even on your version it took six weeks for those details to be provided. Hardly any time for Australian industry team in terms of procedural fairness to respond. The question I put to you is: what procedural fairness do you propose to extend to the Australian industry employing over 600 workers across Victoria, New South Wales and Queensland? I think there are about 250 or 300 in your home state, minister. I think if someone was to look at this objectively they would say there appears to be all sorts of 'procedural fairness' for the overseas manufacturer, but not much of a quid pro quo for the Australian manufacturer.
Mr Sexton : I will not comment on that except to say, as a said earlier, that the 20 days is set down for the submission following the statement of essential facts publication, but the commissioner does have the ability to extend that period in certain circumstances.
Senator XENOPHON: The statement of essential facts concluded that the major exporter Guilin is dumping in Australia but the injury caused to the Australian industry is negligible—is that the case?
Mr Sexton : The finding was that the main exporter was dumping but at a negligible marginal rate of only two per cent. The finding was also that the only other exporter that they were able to identify was not dumping at all.
Senator XENOPHON: How do you expect Olex to compete against a company that is exporting at a zero-profit margin? That is what is happening here.
Mr Sexton : This is still an ongoing case. Therefore, I cannot go into the details.
Senator XENOPHON: You know what? There might not be any jobs there in Victoria if things keep going the way they are. That is my greatest fear, that there could be several hundred jobs gone and hundreds of families relying—
Mr Sexton : I appreciate this company is under pressure.
Senator Ronaldson: I think we all accept that, but I am picking up from Mr Sexton that because this is an ongoing matter there may well be issues that he cannot discuss—
Senator XENOPHON: It might be too late, minister.
Senator Ronaldson: It is an entirely different question about whether this is being done with appropriate haste—and I think that is not an unreasonable question.
Senator XENOPHON: Hang on, I have just given you a time line where it take six weeks at least to find out about the visit to China, and they have hardly got any time to respond. Do you expect Olex to run at a zero-profit margin? Is that the new normal for Australian industry?
Senator Ronaldson: I do not want things said today to so compromise this matter that it actually has the effect of extending it because of other potential action rather than—
Senator XENOPHON: Under the Parliamentary Privileges Act you know very well that nothing said here can compromise any action. That is true, that is the case.
Senator Ronaldson: You understand what I am talking about. We do not want to create an environment where this matter is actually extended not shortened by what is said today, and what may or may not compromise—
Senator XENOPHON: Don't you dare accuse me of extending this matter when I have given you a time line. That is outrageous. Will you withdraw that?
Senator Ronaldson: I did not accuse you.
Senator XENOPHON: You are accusing me of extending this matter by asking legitimate questions.
Senator Ronaldson: Senator, let us be absolutely clear—all I am saying is that this matter is still under investigation and I would not want to see anything happen that might compromise that investigation. That is all I am saying. That is actually quite unreasonable to accuse me of doing that—that is not what I am saying.
Senator XENOPHON: No, you have accused me of stretching this out.
CHAIR: Order. Let's leave this. It is 4.30 on a Thursday afternoon.
Senator Ronaldson: I did not accuse you of stretching this out.
Senator XENOPHON: I have three questions to put on notice and I figure it may be helpful to put them on notice now. Could the department or the commission please outline firstly, the number of preliminary affirmative determinations of PADs published within 60 days from the date of initiation of an investigation, and the average number of days taken to publish PADs. Secondly, the number of times that the commissioner has accepted data from interested parties without conducting on-site verification of the data received, regardless of the nature of an investigation or inquiry—that is, a dumping investigation, review inquiry or a duty assessment. Thirdly, the average number of days taken for exporters to fully respond with a verifiable response to the commission's exporters questionnaire, and the number of responses to the commission's exporter questionnaire that exceeded the statutory compliance period of 37 days. Finally, the gross amount of duties collected and the net amount of duties collected following subsequent duty assessments. That is it. Thank you very much. I am sorry that we had a clash there, Minister.
Senator Ronaldson: Senator, can we just go back a step. There is no reason why you cannot continue asking Mr Sexton about what is involved in the case you were raising. All I was saying was that he had said that he was uncomfortable about that particular question. There is no reason why you should not pursue this. I know your passionate interest. There is no reason why you should not pursue it, as long as the officer can say, 'I am uncomfortable about that part because it is ongoing'.
Senator XENOPHON: I am really worried about these jobs.
Senator Ronaldson: So am I. I think we all are.
Senator KIM CARR: First of all, Mr Sexton did you say that you are the acting commissioner?
Mr Sexton : I am.
Senator KIM CARR: How does that happen?
Mr Sexton : It is an appointment by the minister for the term that the commissioner is away overseas.
Senator KIM CARR: I mean no offence in any way, but why you? Is there a senior position within the department? How does that particular role—
Mr Sexton : I moved from AusIndustry about seven weeks ago into the Anti-Dumping Commission.
Senator KIM CARR: That helps explain; I thought you were in AusIndustry. The Anti-Dumping Commission is an agency within the department, is that right?
Mr Sexton : The staff of the Anti-Dumping Commission are staff of the Department of Industry and Science. The commissioner itself, though, is a statutory position.
Senator KIM CARR: How many Department of Industry and Science officers are now working for the commissioner?
Mr Sexton : Those working for the commission number about 80. There are 80 positions at the present time. That is a mixture of permanent, non-ongoing and contractors.
Senator KIM CARR: How many permanent positions are there?
Mr Sexton : There are 69 permanent positions?
Senator KIM CARR: Are they based in Melbourne?
Mr Sexton : Thirteen of those are based in Canberra.
Senator KIM CARR: What about the rest?
Mr Sexton : The rest are based in Melbourne in Collins Street.
Senator KIM CARR: So the agency is essentially a Melbourne based agency?
Mr Sexton : It is.
Senator KIM CARR: Of the 13 who are based in Canberra, how many are SES officers?
Mr Sexton : There are no SES officers based in Canberra.
Senator KIM CARR: So it is all in Melbourne?
Mr Sexton : Correct.
Senator KIM CARR: The management of the commission is in Melbourne?
Mr Sexton : There are only two SES officers: my colleague Ms Hind and myself.
Senator KIM CARR: For 80 staff? Is that ratio normal? You work very hard, I know.
Mr Sexton : I do not wish to comment on that. That is the structure that has been in place for a year or two.
Senator KIM CARR: How many contractors are there? There are 69 departmental officers and—
Mr Sexton : There are six contractors.
Senator KIM CARR: Are they contracted to the department?
Mr Sexton : To the Department of Industry and Science, yes.
Senator KIM CARR: Are they long-term contracts or short-term contracts?
Mr Sexton : Yes, short-term contracts.
Senator KIM CARR: What sort of work do the contractors do?
Mr Sexton : The contractors have been engaged primarily after a period of training to work on some of the low-level investigations that the commission is conducting.
Senator KIM CARR: Why do you need contractors to do that?
Mr Sexton : It is a question of how to best manage our variable workload. It is also an initiative to get people on board quickly with the required high levels of skills.
Senator KIM CARR: I see. Then they apply for permanent positions, do they?
Mr Sexton : Not necessarily. Most of those permanent positions are filled. But, as I said, it is a mechanism for addressing the variable load of the commission, which at the moment is very high.
Senator KIM CARR: And it is not likely to get any lower, is it?
Mr Sexton : In the foreseeable future, no.
Senator KIM CARR: So is it smart to put contractors on when you have an expectation that the workload is going to remain high?
Mr Ryan : The Brumby review of antidumping recommended that we should have an antidumping commission and that it should be based in Melbourne. The intent was for the experienced officers from Customs to fill those positions. But, as you would appreciate, a lot of Customs officers did not want to move to Melbourne.
Mr Ryan : I shake my head too, because I cannot see why you would not want to do that.
Senator KIM CARR: Appalling!
Mr Ryan : Over the period we have been trying to manage two pressures. One is that there has been a rapid increase in the workload. The second is trying to transition—where we had to rebuild the staffing. What started off as an organisation that was meant to have a complement of 60 people—we have increased the numbers to try to manage the workload. We also looked at the issue of—there are what we call reviews that needed to be done and they were building up a backlog. They do not have the time frames that a normal dumping inquiry would have but the expertise you needed was more closely associated with accounting-type skills. So we set up what we call tiger teams to bring in these skills on a short-term basis, and we think we can clear that backlog by, if not the end of June, certainly the end of July. That was a deliberate management challenge that we had. We were also building the complement of investigators. That just takes time to build up, and we are looking to do that.
Senator KIM CARR: Can you tell me about the increase in the volume of steel imports in the last six months? Do you have any advice for me on that?
Mr Sexton : We do not have any information here about that.
Senator KIM CARR: Could you take that on notice? I am particularly interested as to whether there has been an increase in the number of inquiries to the commission relating to steel dumping and whether those inquiries have led to a formal application.
Mr Sexton : I do not have figures in relation to inquiries but more than 80 per cent of our applications relate to steel or aluminium dumping.
Senator KIM CARR: Do you anticipate that number increasing, or decreasing?
Mr Sexton : In terms of major applications with regard to dumping, there have actually been slight decreases in the number of applications over the last two quarters.
Senator KIM CARR: I note that the European Commission has recently launched an antidumping investigation into cold-rolled steel imports. They have also imposed provisional tariffs on flat-rolled electrical steel. Are these and similar activities in other jurisdictions likely to have a flow-on effect for Australia?
Mr Sexton : I think I read the same material about that. It may; it may not. At the moment we are not seeing that, but that does not say that it may not happen in the future.
Senator KIM CARR: You do not know.
Mr Sexton : We do not know at this stage.
Senator KIM CARR: Does the commission have any estimates on the extent of circumventions of existing duties?
Mr Sexton : I can talk about the change that occurred in April this year about anti-circumvention due to the slight modification of goods. A new regulation came in from 1 April. That relates to the slight modification of goods by the addition of particular components to slightly modify those goods so that they no longer fall within the measure that has already been set. Since 1 April we have had three companies apply to us now under those provisions, and they relate to some four countries—the countries concerned are the Republic of Korea, Taiwan, China and Malaysia—and in all cases they relate to steel products.
Senator KIM CARR: I might just follow through with an additional question from that that is asked by Senator Xenophon, in regard to electrical cabling. A statement of essential facts which was made public last week by your commission, on the investigation of cabling for China, stated that local industry had suffered price suppression, reduced profits and reduced profitability as a result of imports from China. Have I understood that correctly?
Mr Sexton : I do not have that detail that was in the statement of essential facts, but the conclusion was that, as I said earlier, there was negligible dumping—
Senator KIM CARR: I have got page 7 of your public record, under clause 1.4.5, Economic Conditions of the Industry. I believe I have quoted it correctly. It does say:
The Commission has found that some Australian industry prices were undercut.
Mr Sexton : Prices may be undercut, but we still need to prove a link between the dumping, or the alleged dumping, and material injury.
Senator KIM CARR: So that is the process that you have got underway at the moment? That is the bit that you are anxious about discussing, because you are in the middle of that?
Mr Sexton : We are in that process, and I understand that our team that did this investigation met with Olex today, to take them through the details of their investigation and their findings. This will enable Olex to better prepare any submission that they might make in response to that.
Senator KIM CARR: In regard to the work of the commission, or the department, for that matter—this might be a question that Mr Ryan might be able to help me with—has any testing of imported products been carried out to ensure that they are in fact compliant with Australian standards?
Mr Sexton : As far as the commission is concerned, that is outside our scope of activity.
Senator KIM CARR: What about you, Mr Ryan? Can you help me here?
Mr Ryan : I think this is outside the dumping specification issue.
Senator KIM CARR: But the standards issue it is not.
Mr Ryan : The standards issue is the building products one that we were talking about earlier today.
Senator KIM CARR: But this is in regard to electrical cabling. Is there any work being undertaken on imported products, given that there is this matter here? It may not be directly associated with the commission, but is the department undertaking any work in regard to compliance with Australian standards?
Mr Ryan : As far as I know, this issue has not been raised with us.
Senator KIM CARR: Can you take that on notice, to establish whether or not—
Mr Ryan : Yes. I am just being advised there may have been something with the ACCC.
Mr Lawson : You may be referring to this. There was some non-compliant electrical cable that was being sold a while ago. I think the ACCC or Fair Trading put an end to that stuff being imported. It was being sold through major hardware stores, so there has been quite a lot of publicity about that issue.
Senator KIM CARR: All right. You can take it on notice to see if there is any work being done in this department, the industry department, on standards issues. When was the next meeting of the International Trade Remedies Forum scheduled?
Mr Trotman : The government is finalising its plans for the next meeting of the forum for later this year.
Senator KIM CARR: There is a requirement, by law, for it to meet at least twice a year. That is correct, isn't it?
Mr Trotman : That is correct.
Senator KIM CARR: And it last met in March 2013.
Mr Trotman : That is right.
Senator KIM CARR: So you will not be compliant with the law, will you?
Mr Trotman : Now we are 2015. It depends when the next meeting is held and the meeting thereafter.
Senator KIM CARR: You certainly will not be compliant this year.
Mr Trotman : For 2015, it depends on when the next meeting is held.
Senator KIM CARR: So you are having two meetings in six months?
Mr Trotman : Potentially. I would not want to commit the government to that, but there is always potential for that.
Senator KIM CARR: It is good to hear that. I look forward to it. What is on the agenda for the next meeting?
Mr Trotman : That has not been developed yet. It is still with government.
Senator KIM CARR: I understand that there are a number of outstanding issues that the forum was looking at when it last met in March 2013. Will those issues be carried forward?
Mr Trotman : I think the bulk of the issues that you mention have been dealt with as part of the previous government's streamlining reform package.
Senator KIM CARR: But there were aspects there about monitoring the operations of the current act, which, of course, we have dealt with with recent amendments. Will that work be undertaken by the Trade Remedies Forum?
Mr Trotman : I cannot confirm that, but I guess there is potential for those sorts of things to be looked at.
Senator KIM CARR: I am sure you are aware of the views that I have expressed on this matter, and the fact that the parliament cast a judgement on that matter recently. Given that the essential role of the forum is to provide expert advice to government on the operations of the antidumping system, will the forum be actually given the opportunity to undertake that function?
Senator Ronaldson: The government is considering all these matters, including the make-up of the forum. They are matters for the minister. When that decision is made you will obviously be aware of it. Otherwise it is purely hypothetical. The minister is considering the whole issue and looking at the make-up of it. We cannot answer any more than that. Anything else is speculation, and we are not going to do that.
Senator KIM CARR: I look forward to hearing what actually happens at the next estimates. Dr Richards, can you tell me how many firms are currently registered for the ATS?
Dr Richards : 122.
Senator KIM CARR: Have any new applications been received since the last round of estimates?
Dr Richards : No.
Senator KIM CARR: I read in the press that Ethan Automotive are applying. Have they applied? This is their statement, so I am not asking you to breach a confidence.
Dr Richards : They have made that statement, yes.
Senator KIM CARR: Have they applied?
Dr Richards : They have made that statement. We would not discuss an individual applicant until determination.
Senator KIM CARR: But there have been no new applicants?
Ms Facey : I have some more recent data. The number of registrations for the Automotive Transformation Scheme is currently 121. There was one deregistered just recently. My colleague may not have seen those figures. The figure at the last estimates was 122. Since then three applications have been approved and four customers have been deregistered. Of the four who were deregistered, one was deregistered from being an automotive components producer and became a toolmaker, one sold their business to another company and two no longer produce any automotive components whatsoever.
Senator KIM CARR: Have you had any further applications under the national interest regime?
Ms Facey : I will refer that to my policy colleagues who handle that part of the program.
Senator KIM CARR: Thank you, Ms Facey. That is very good.
Dr Richards : An additional four.
Senator KIM CARR: They have all applied for national interest?
Dr Richards : Yes.
Senator KIM CARR: How many have been granted permission? How many of the applications have been agreed to?
Dr Richards : I am sorry, senator, I may have misunderstood that question. Previously, we had seven at the former estimates. We now have 11 companies. Two have been approved to apply for registration and nine are for continued registration.
Senator KIM CARR: Have you had any further applications for any new investment in the automotive industry outside of the ATS?
Dr Richards : Not to my programs.
Senator KIM CARR: Not to the division?
Dr Richards : Not to my branch.
Senator KIM CARR: We have discussed this on previous occasions. We know at least three circumstances where companies have approached the department with proposals for new investment in the automotive industry. You are looking at Mr Chesworth. He is thinking that you are doubting what I am saying.
Mr Chesworth : No, senator. I am just thinking: how do you indicate that any approaches been made through other parts of the division?
Senator KIM CARR: Or to the department.
Mr Chesworth : I am not aware of any.
Senator KIM CARR: So it is just the three. There have been no new expressions of interest?
Mr Chesworth : To the best of our knowledge, no.
Senator KIM CARR: That concludes my questions. Thank you very much.
CHAIR: Ms Beauchamp, thank you very much to you and your officers. The day has proceeded extremely well. All the questions have been answered. It would be good if you adhere to those return dates for the questions on notice because I get it in the neck at the committee meetings when they are not back. Thank you, Minister, for your time, and pass on my thanks to Senator Colbeck who was here as well. To the secretariat who do such a wonderful job and, of course, my heroes in broadcasting and Hansard: thank you all very much. That concludes our budget estimates sessions. We are adjourned.
Committee adjourned at 16:57